How to Pitch Your Idea before Investors
Surprisingly, most “fresh and innovative ideas” laid out on thematic websites or from individuals are not in such a great demand as many think. Firstly, because large companies have their own creative departments and rarely seek help from outside; secondly, because private investors are very selective in financing projects that have no guarantees of immediate profit.
Therefore, before you put your business idea up for sale, you should thoroughly consider how to pitch it to potential investors so that to make them argue among themselves for the right to buy it.
There are a few ways to present your idea:
- Share images or thoughts by word of mouth. A simple conversation requires neither money nor time, but you won’t be able to prove the authorship of the idea if the investor steals it.
- Outlying the essence of the project, indicating its strengths and weaknesses. This approach will give potential partners a bit more information, but it’s still unsafe, won’t bring you big money and won’t protect you from copyright issues if they appear.
- Patenting your idea. Although examination on the issue of patenting can take up to a couple of months, while the process itself is costly, it will protect your idea by local or international copyright laws. Note two things:
- Patenting protects your intellectual property but does not guarantee its implementation.
- You can patent a specific way of implementation but not the idea itself.
- Developing a business plan. Developing a business plan requires some financial and time costs, but it will be of practical value to the investor, which greatly boosts your chance to sell the idea.
- Establishing a start-up. This is obviously the most effective way of selling business ideas. However, organizing your own company requires total dedication, and you will have to provide initial funding at your own expense.
Naturally, most investors seek a ready-made business, and it will be a tough task to sell the pure idea without bringing at least some practical examples of its implementation
Very often beginning entrepreneurs face the need to tell about their idea very briefly. Here the time factor comes into play: investors, for the most part, are employed, busy people, which means you have very little time to convey your ideas to the listeners (usually, up to 10 minutes).
At first glance, it may seem that it’s impossible to fit all the information into 5 or 10 minutes, but once you’re on a stage, you see that every single minute lasts long, and you have enough time to outline the basic ideas of your new technology or approach. The only trick is to choose the right words.
How to highlight the most important things within a given timeframe? How to leave an indelible impression? Below are some tips.
#1 Learn in Advance Who Your Listeners Are
Prepare for the meeting. Find out as much information about the potential investors as possible. Who are the main investors? Who of them are the leaders in the industry? Make sure your speech is focused on attracting investment, not just showing the beauty of the idea. The more you focus on your goal, the more subtly you can tune your message for a specific audience.
#2 Treat the Meeting as a First Date
The first meeting with the investor is like a first date. And, just like on the first date, if you start talking about your previous acquaintances and views on parenting, you probably won’t get a chance to continue your story the next day.
Try to spend the first date fun and interesting. Your main goal is to get the second date. Don’t sell too obtrusively!
#3 Make the Dialogue Personal
Even when speaking to a large audience, try to make the conversation personal so that each listener feels himself in a personal, eye-to-eye meeting. When presenting the problem that your idea or product is designed to solve, start with a story or event from your life that led you to the idea of the need to change something. For example, it can be a story about a person who inspired you to start a new business.
#4 Don’t Go Into Technical or Economic Details. Instead, Visualize Your Project
Once you outlined the problems that require a prompt and decisive decision, move on and explain the essence of your unique solution. However, do it in a language that everyone can understand. Even if every aspect seems clear to you, don’t use professional jargon and don’t go into technical subtleties.
The earlier you show your product to the listeners, the faster they will understand its essence and want to receive it. It can be a short movie (up to a minute), a few screenshots or any other kind of demo material.
When talking about the business side of your enterprise, do not use detailed tables and diagrams. Instead, focus on three main things:
- What makes you special (what distinguishes you other companies)?
- How do you plan to make money (how are you going to attract customers)?
- The main points in short: the volume of the market, the time for its development, etc.
After that, you can add a small number of business teasers, and if the investors want to know more, they will ask questions. To provide more detailed details, you can appoint the “second date.”
Do not bother with the hope that declined heads mean that your words are outlined – listeners are rather busy with their own affairs or dozing.
Summing Up, or What Points You Must Highlight in Your Presentation
- Section #1. The problem that your idea or product solves, supported with undeniable, eloquent statistics.
- Section #2. In what way the project solves this problem. Show ingenuity and resourcefulness. Present your ideas creatively, focusing on benefits for both the investor and the society as a whole.
- Section #3. Specify the target market and the prospects of the project. Make an approximate estimate of the potential profit.
- Section #4. Review competitors, consider the current situation on the market and in the selected segment. Mention all known analogs and focus on the advantages of your product or idea.
- Section #5. If you sell a ready-made business, make sure to admit that you have a friendly staff able to raise the business quickly. The investor must make sure that you possess a team of professionals capable of building a competitive and profitable company.
Once you finish the 5th section, you can dig deeper into financial needs, outlining the estimate and other costs you think you need to bring the idea to life.
Never ignore possible risks and safely discuss them at the meeting. Investors are all well-educated entrepreneurs so that they know no business can exist without risks and failures. By sharing possible pitfalls, you will get more credibility from investors.
About the Author
Lucy Adams is an independent blogger and outsourcer from idapgroup.com. She’s a talented generalist, and she’s always in touch with readers. Feel free to supply Lucy with your brightest ideas and let her choose one of a few of them. By the way, guest posts are free!
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