Get better at pitching your core business idea to Investors

The venture capital world has seen a transformation over the last 2 – 3 decades. From a purely tech funding activity, venture capital has diversified into funding of innovative apps, products and solutions, Startup funding now enjoys a widely diversified base covering varied sectors and extending differentiated stage specific funding of startups. In the initial days of exuberance, startups of any description could easily find an eager investor with pen uncapped and eager to sign cheques. That exuberance has since been replaced by sobriety and prudence especially after the dotcom collapse in the early 2000s.

Yet there is no shortage of funds for startups, with many winning several rounds of funding. Even in a landscape clouded by uncertainties, some exceptional startups turn into unicorns. What makes them tick? How do they manage to convince sceptical venture capitalists to open their purse strings?

Writing for Kellogg Insights Professor Carter Cast of Kellogg School of Management at North Western University USA lists out 5 simple tips to sell your core business idea to investors

Prof Caster Cast, apart from teaching at Kellogg’s wears the hat of a venture capitalist as well. So, he listens to a lot of pitches for investment.

Here is an adapted listing of Prof Carter’s tips for making a winning investment pitch

• 1. Make your first 30 Seconds count

It pays to come out strong and cut to the chase. Prof Cast recommends that as an entrepreneur you

1. Open with a 30-second “elevator pitch” on their value proposition.
2. Help the investors learn about your target market, that market’s need, and your solution in that half minute pitch

• 2. Identify your Blue Ocean and stay focused on it

One common weakness of many entrepreneur presentations is their obsession with Total Addressable Market (TAM) represented by the vast size of the potential market for their product and how much of it they are confident they can eventually capture.

But such a broad canvass approach may not be the right way to impress potential investors. A more alluring pitch would be to highlight the segment of the market where your business “can most immediately find a toehold, get some traction, and start thriving”

• 3. Acknowledge contributions of your team

Entrepreneurs often pitch with a few of their key people present. They have them around to take questions on niche areas of the business and respond to questions. Introducing the team is a great idea. But it would create a stronger impression if you go a step further and offer a quick, impressive insight into just what each member brings to the business. “Brag about what is impressive about your team, because nobody else is going to if you don’t” urges Prof Cast

• 4. Prevent technology glitches

While pitch meetings can impress and get you the funding in a single sitting, they also carry the risk of epic technology failures that creates doubts in the minds of investors. So, the best thing for entrepreneurs hoping to wow everyone in the room with their new technology is to automate the demo

• 5. Build a buffer in your ask

Pitches, ultimately, are about securing funding. The only measure of success is in the quantum and timeliness of investments you secure. So, that is not the time to be shy or overly conservative. As a thumb rule Prof Cast suggests that when you ask for money, ask for two times what you need. “You’ll need buffer. Not everything you do is going to run smoothly and unforeseen costs happen all the time” reminds Prof Cast

You can read the Kellogg’s Insight here

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Author Information

Carter Cast is Michael S. and Mary Sue Shannon Clinical Endowed Professor of Strategy, Kellogg School of Management, USA, Venture Partner, Pritzker Group Venture Capital (2012-present), Former CEO, Hayneedle, Inc., 2007-2011 & Former President and Chief Executive Officer, WAL-MART STORES, INC., 2005-2007

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