There’s a reason the investor pitch is so scary: because it’s so, so hard to get right. Here’s what you need to know about pitching to investors in 2023. Let JTB Consulting help you to hit your pitch deck out of the park.
Pitching to Investors in 2023
It’s hard to think of anything more closely associated with the startup experience than pitching to investors. Think about it: virtually every startup and entrepreneurial competition end in a pitch deck presentation. The promise of pitching to real, live investors is the grand prize at incubators everywhere. Television shows are devoted to following people as they pitch their companies. Podcasts, too.
And no wonder: when you pitch to investors, you’re putting your heart on the line, spilling your guts about why you believe down to your bones that this business needs to happen ― and you need to be the one to lead it. It’s not hard to see why that makes for compelling viewing/listening.
But there’s another reason the investor pitch is so iconic: because it’s so dang hard to get right. Closing the deal with investors is like trying to defeat Thanos with no superpowers at all: the target is unbeatable, and there are about a million ways to mess it up.
Pitching to Investors ― What are Investors Looking for?”
We won’t make you feel small and useless; this is your desired answer. It’s the answer we all want: what are investors looking for in a pitch? What’s the detail that makes them decide whether to invest or not?
One may be a strict by-the-numbers person who looks for strong numbers. Another might be a sucker for giant market size and the potential 10X return in the first few years. A third might go by their gut or a feeling that they have about the founder standing in front of them.
That being said, there are some things that all investors tend to look for when they’re listening to your pitch. The essential investor wishlist for any potential investment breaks down into three core buckets: Credibility, Likeability, and Momentum.
- Credibility: Do these people know what they’re talking about? Do they know their company and their industry backwards and forward? Have they done their research? Do they have the right knowledge and experience to make this happen? If they don’t know, will they likely be able and willing to gain it?
- Likeability: Do I like this company and this product? Do I feel good about what they’re doing and what it will mean to the world? And, just as importantly: do I like these people? Do I feel good about spending hours and hours with them throughout who knows how many years working to make this business happen?
- Momentum: Do these people have the WOW factor? Are they getting things done independently, or are they waiting for my money to magically make it happen? Would my money be kindling on a fire that’s already dead? Or would it be fuel on a fire already burning strong and just waiting for some fuel to blow it up?
The element that seals the deal may differ from investor to investor, but if you evaluate your pitch in light of these three core values, chances are you’ll be speaking investors’ language more often than not.
Pitching to Investors ― Investors are People too.
Government funders, private investment houses, VCs and angel investors have taken on somewhat mythic proportions in the startup universe. They are the gatekeepers. The hitmakers. The person deciding whether you make the cut to sit at the cool table or not!
Because of their vaunted status, there’s a tendency to think of investors as these all-knowing, all-seeing beings ― fortune tellers crossed with supercomputers, who listen to pitches, tweak a few numbers in their algorithm, and spit out the decision that makes or breaks a startup’s future: yes or no.
But here’s what you must realise about investors: they’re people, too. And, like many people, sometimes what investors want more than anything is just a good story.
The story of your customers, the story of your product, and your audience.
What does this mean for your pitch? It means it’s insufficient to spit out impressive market size figures and well-thought-out revenue projections. Alongside that, you need to be building a compelling vision of what it all means: for your customers, for your company, and the investors themselves.
- How does it feel to be your target customer living in a world without your solution?
- Why do you personally feel so strongly that this solution needs to exist?
- How will the world be different and better five years from now when customers have adopted your solution?
These kinds of storytelling details add depth, dimension and, above all, humanity to your pitch. They help investors see your company not as a collection of slides in a pitch deck but as a living, breathing thing.
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Pitching to Investors ― You’re the Expert. So be the Expert!
Another important thing to remember about investors who are also people: try as they might, they don’t have perfect knowledge of every industry or every emerging technology. But don’t let that scare you away from pitching your business.
If an investor doesn’t “get” the industry you’re working in or the solution you’re building, your job is to help them get it. That’s why you’re the founder, not them. You’re the one with the vision. You’re the one who sees the whole board and how the pieces are moving. Sometimes, you have to help investors see what you see.
We’ve talked elsewhere about the importance of cultivating radical empathy for your audience and their needs. There are few places where that empathy is more important than when you’re pitching investors.
Investors look at hundreds of pitches every week, month, and year. With all that data taking up space in their hard drive, their processing speed is not always the best.
Pitching to Investors ― You Still have to Bring your A-Game!
At this point, you might think that much of this advice sounds like touchy-feely nonsense about tucking investors into bed with a story and making them feel good about your company. But don’t get us wrong: you still have to bring it. Because as much as investors may want to believe in your pitch ― their job is to look for every reason not to.
When you’re pitching investors, you’re basically putting your company on trial. You’re the defence lawyer, and investors are the prosecution. As the defence, your job is not only to build your argument for why your company will succeed ― it’s to dismantle the prosecution’s argument for why it won’t.
From the moment you start talking, investors will look for holes: flaws in your logic, calculations, and story inconsistencies. Your job is to aim to melt all the investor’s objections in the first 3 minutes. One surefire way to fail the test? By not knowing your numbers. You have to know your numbers inside and out.
Pitching to Investors ― Do your Homework!
There are endless amount of information out there about the work you need to do on your company to get it ready for investor meetings. But there’s a flip side to the equation that’s not discussed nearly as much: the work you must do for investors.
You need to do your due diligence on investors like they would do on you. See if you can find their sweet spots, portfolio, LinkedIn page, interests, and blogs.
Doing due diligence on potential investors before you pitch to them helps you determine what aspects of a company different investors care about the most, so you can tailor your pitch to hit those key components.
But there’s another advantage: it helps you decide which investors you want ― and which you don’t.
There are good and bad fit investors for your company like there are good and bad fit customers.
Take the time to identify which investors your company is a good fit for and which. If you do, you’d be amazed at how successful your pitching experience will be.
Pitching to Investors ― Practice, Practice, Practice!
Don’t pitch to them once you find those investors that are the perfect fit for what you’re trying to build.
We know what you’re probably thinking: wait, what? But hear me out. The first few times you give your pitch, chances are it will be rough. There will be questions you didn’t anticipate and details you didn’t think through fully.
Do you really want your ten minutes with your dream investor to be the time when you discover those holes?
I didn’t think so.
Investor meetings aren’t just meetings: they’re workshops. Whenever you’re in a room with an investor, you will get feedback on your pitch and business. That’s the feedback you can take and incorporate into your pitch to strengthen it. So why not spend those first couple of feedback cycles on some audiences that are a little less high stakes?
Trust me: you need practice!
Founders are sooooo close to their product that it’s nearly impossible to tell the story from another person’s perspective. Don’t let a meeting with your dream investor be the first time you realise your pitch doesn’t make sense to anybody but you. Find someone ― find lots of people ― who can look through the eyes of the investor and ask all the tough questions an investor would ask. Then ― and this is the big one ― incorporate the answers into your pitch.
As with anything in the crazy world of being a founder, messing up is not worth crap until you learn from it.
Pitching to Investors ― Learn to Love Rejection
There you have it: all the ammunition you need to go into your first (or second, or tenth) investor meeting guns a-blazing and ready to set the world on fire.
But let’s be real. If investors had all the answers, they wouldn’t need Founders to develop ideas and build the damn thing; they’d do it themselves. So no matter how many investors turn you down or flat-out refuse to answer your emails, listen to your gut above everything. If your gut says go for it, go for it.
Every investor has a list of “the ones that got away”: multi-million Rand companies they had the opportunity to invest in but didn’t.
Your company could very well be the next one on their list.
Want more free advice on Pitching to Investors? Read some of our past blog articles: