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Selling a Start Up idea - 5 Tips to remember when pitching your Core Business Idea to Investors
The financial press is full of grim stories on the funding winter that has now arrived in the land of startups. Yet there are daily reports of startups that do very well in pitching to investors, winning several rounds of funding. In this bleak landscape too, some exceptional startups are even turning unicorns. What makes them tick?
Writing for Kellogg Insights, Professor Carter Cast of Kellogg School of Management at North Western University, who is also a VC investor himself, lists out 5 simple tips to remember when selling your startup idea to investors:
- Make your first 30 Seconds count
- Open with a 30-second “elevator pitch” on your value proposition. That's just how much time you get to selling your startup idea.
- When pitching to investors, help them learn about your target market, market’s need, and your solution in that half minute pitch
- Identify your Blue Ocean and stay focused on it
One common weakness of many entrepreneur presentations when pitching to investors, 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 when selling a startup idea, 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”
- Acknowledge contributions of your team
When selling a startup idea, 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
- 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
- Build a buffer in your ask
Pitching to investors, ultimately, is 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 on Selling a StartUp idea here