A pitch is a critical step in garnering financial backing for a startup. An effective pitch must be concise, easy to understand, passionate, and well rehearsed. However, you may receive only three minutes to share your concept, depending on the platform. Make the most of your time by considering these factors when building your pitch:
Know Your Audience
Fight the urge to talk about yourself at the beginning. Despite being the brains and leader behind your startup, investors are looking to be sold to and convinced that your business model is worth their time and money. In that respect, kick off your pitch by talking to audiences about your venture and how it solves a consumer problem. Share the critical nature of your business product or service and why it is worth an investment. Anticipate their questions and prepare answers that they will respond to positively.
Do not forget to include the logistics of how you intend to deliver your product or service to a specific demographic, as well as the type of consumers you wish to reach. For example, if you sell shirts displaying “nerdy” messages and graphics, your pitch should highlight a consumer profile that includes people ranging in age from 13 to 50, fans of science fiction and comic books, and people with limited discretionary funds.
Create a Value Proposition
Investors wants to know the main point of your business, so you must develop a compelling value proposition. A value proposition tells the public what product or service you provide and how it is unique compared to others of similar nature. To build an effective value proposition, Forbes recommends defining the issue you intend to solve and making sure it is worth the effort, then determining if your solution is gripping enough to draw in investors. You will know it is if your product or service shows innovation, creates a competitive advantage, and yields significant returns that can scale a business.
You also want to take into consideration how user friendly your product or service is. The goal is to have the amount of gain, which includes revenue, cost savings, and time invested, outweigh the pain of purchasing and using your product and service. Ideally, the gain should outweigh pain by 10 times.
With this information, develop a value proposition to explain why your company beats competitors. Answer for who the product or service is for, which competitors are not meeting consumer needs, what your product or service is, how it answers buyers’ problems, and what alternative will not effectively achieve the same results.
Talk about Traction
While there were once many websites similar to Groupon, the latter earned millions in support by venture capitalists because it demonstrated solid traction. Traction is a good indication of how your product or service will perform in its respective market. In a perfect scenario, you will be able to show that there is high consumer demand for your particular offering. For online traction, you should develop a strong brand that attracts attention. Make a video that explains your product or service and how it works. This can be touted across the Internet, making the public more aware of your startup.
Gain media attention by becoming an expert in your field and presenting yourself as such. Early research can help you identify a trend that reporters may find interesting. Pitch the trend to them. If selected for an article, leverage the opportunity to highlight your company with a quote. Be careful, however, that the topic is applicable to a wide audience; reporters are more likely to invest media efforts in a story that appeals to more people.
More traditional ways of sharing traction are reports indicating financial gains and company growth. Provide potential investors with information about your consumers, partnerships made, quantities of retailers selling your product or service, and consumer conversions. You can also share details about the evolution of your company and how you took a product or service from alpha testing to launch.
Highlight Your Support Team
Investors want to know about the talent behind your company. Build a solid management team and workforce that can support the business’ growth. Be selective in who you choose, so when you are ready to pitch your concept to venture capitalists you can proudly share their backgrounds, along with how they have improved and will benefit your startup. It is important to convince others of good team chemistry.
Discussion of your team should also include information about endorsements. Endorsements from others, such as advisors, illustrates credibility and legitimacy. Further, promoting existing financial support will establish your business’ solidity. As a whole, being able to explain the success of your startup, thus far, with the team and support you have in place will make investors believe in your value as a business owner, recruiter, and salesperson.