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You may have heard our Elevator Pitches or have been a voter in one of the Elevator Pitch Contests at our site. We’ve always highlighted pitching to help you learn about the ingredients and style that make for effective pitches to investors in very tight timeframes. And what could be more critical. If you can’t get an investor’s attention on the spur of a moment over the course of a couple of minutes, how are you ever going to get them to seriously consider an investment?
Below is our advice on how to think of and position your pitch and how to ensure that you have the best chance of raising money for your business.
First, take heart. Though the media would have you thinking otherwise, money is still out there. Even though angel investing was down 30% in 2009, it still tallied a whopping $9.1 billion with average investment in each deal around $327,000. And take heart further in the fact that most businesses are self-financed or are funded with small amounts of money from friends and family. With the average startup costs of a business running at approximately $10,000, and most home-based/web-based businesses requiring far less than that, starting up is within reach.
If you do need to raise money, give yourself the best chance of success by memorizing your pitch and then being able to modify on the fly as the situation demands. This is how you become “pitch perfect,” to borrow a phrase.
Use these three primary themes when formulating and delivering your pitch:
You build confidence by reviewing the most credible aspects of your business opportunity. For example, if you have a track record in the field of the business, by all means, brag about it. If you have a stellar management team, mention that. Another credibility-builder is mention of any market traction or feedback based on what you offer. Overarching comments about the exciting market you’re in, hopefully with a nice growth rate would also help. And nothing creates confidence more than you demonstrating that YOU KNOW YOUR STUFF!
This is related to building confidence but focuses more on the “soft” aspects of delivering a successful pitch. Remember, your primary objective is to inspire the investor to want to learn more. The best possible result is hearing this question, “Can we set up a meeting to talk more about this?” Or second best, “Send me some information on it.” To get that result, you have to show your passion and you have to trigger in the would-be investor all the possibilities that exist if they get on board. For example, talk about the positive social impact. Mention the speed of getting to profitability. Refer to positive customer experiences you’re tracking or third party data that shows huge upside. Do whatever it takes to make Mr. Moneybags salivate to be part of what you’re doing.
Note that more experienced investors will be sizing you up. If they see that you are capable of exciting them, they’ll be more confident that you could do the same as an evangelist for your company.
Provide an Action Plan
Lastly, be sure to provide a clear action plan. This applies to the specific action you want the investor to take as well as the game plan for your business. Regarding the latter, be sure you clearly state generally what the funds will be used for. “This money will be used mostly for generating sales leads through trade shows,” for example. Or, “Purchasing the machine will enable us to make our widgets faster and less expensively, thereby increasing our output and margins.” Whatever you say, make it clear that the money is going to be applied to creating value for the company.
And regarding the action plan for the investor, don’t leave things hanging at the end of the pitch. Tell the investor exactly what you’re after and what you’d like the investor to consider. Be clear what action you’ll take to follow up if interest is expressed. And then act fast. Investors are constantly barraged by offers and can easily be distracted. So you have to not only get them interested in your opportunity, but keep them thinking that way. The faster your turn-around time is on the follow up, the more likely you’ll be to get results.