Pitching to investors is an artform. If you want people to invest in your business, be prepared to answer the hard questions. Investors will always look for smart investment opportunities—meaning that they want to find out as much as they can about you and your business before they decide whether or not to invest in you.
It’s vital to have well-thought-out answers to investors’ questions. You need to show investors evidence that you have examined your business in-depth to make them feel comfortable investing in you.
Here are four questions to be prepared for when you pitch your idea to investors.
Why does your business need to exist?
Businesses exist to provide customers with a solution to a problem. Show investors, there is an issue people need to solve, and you are the one with the answer.
Investors will want you to prove to them that there is a huge need for your business to warrant an investment. Identify your target market to them and show why and how you’re helping them. It doesn’t have to be a large group; it can be an exclusive one that you can sell your service or product to at a higher price point.
Show investors the pain point you’ve identified, how your solution will address that, and how your solution ultimately will help customers, by saving them time or money. Use data to find hard facts and examples to back up why your business is necessary.
Why are you uniquely qualified to run this business?
Identifying the problem and showing the solution is not enough. You need to prove yourself and show why you are the person to run this business. Investors want to see how your experience and knowledge gives you an advantage over the competition.
For example, most investors wouldn’t put their money behind a restaurant that wasn’t owned or managed by someone without restaurant experience. When pitching to investors, show them what gives you the qualifications to run the business and beat the competition. Maybe you have an education that enables you to manage a business, or perhaps you have in-depth and prior experience with the issue you’re solving.
Whatever the case is that you make, investors should come away knowing you are the exact right person to run the business.
How will you use the funds?
When pitching to investors, focus on your plan for using their money; otherwise, they won’t want to give it to you. They won’t want to hear that their money will pay for your big salary or a fancy car. Investors’ money must go to costs directly linked to making your business successful.
Have a strategic and concrete plan for how their investment will be used. For example, the money can be used for customer acquisition, fund research and development, or to pay suppliers for start-up costs.
Don’t just tell them that the money will be used for marketing— always show a plan with goals and milestones in place, so they know you have a marketing strategy.
Who are your competitors?
Never tell investors that your business has no competitors; contrary to what you may think, it is never good to say there are no competitors as this suggests there’s no market for your service or product. Even if there aren’t direct competitors, show investors other businesses similar to yours, then focus on what makes you different.
To successfully pitch to investors, you’ll need to be prepared to answer the hard questions. Always do research, set out strategies, and anticipate the investors’ concerns; you can give them the answers they need to feel comfortable investing in your business.
If you have any questions on how you should be pitching to investors, we can help. Feel free to Join the conversation…