Capitalize on winning over your next venture capitalist with a little help of your business pitch. So what does it take to stand out from the crowd and ensure that you will impress the venture capitalists?
Sorry to be the bearer of bad news, but you are not the only entrepreneur on earth who is trying to secure funding. When I started my first company, I used to pitch my business idea to venture capitalists three to fives times daily. And yes, that gets old really quick. Given the fact that there are a large variety of venture capitalists, you will definitely need to stand out in the crowd to ensure that you get the funding your company so desperately needs to grow and prosper. Here are some ways in which you could knock entrepreneurs’ socks off through your pitch:
1. First of all, you must have a real business in place. It may sound obvious, but if your genius business idea is only that, an idea, that doesn’t mean that there’s an actual business somewhere in there. Venture capitalists tend to be more impressed and eager to fund a company that already has a functioning business rather than something that will get acquired only for a good pay day.
The first thing you need to do is to create an amazing business plan that clearly states the purpose of your business, the tendencies within the market, the organization of your business and the amount of funding that is required. You can read more on how to write your business plan HERE.
2. If you’re not networking already, you should start immediately. So you’ve got your business plan in front of you. What next? Before actually contacting venture capitalists, go ahead and start networking and get an introduction before you go ahead and ask for money.
Begin by comprising a list of venture capitalists you want to pitch your idea to. After identifying them, get in touch with some of their contacts. By making a good impression on a person close to the VCs, you, my friend, are part of their inner-circle. If that is not really a viable possibility, get in touch with them via Twitter and LinkedIn. Moreover, pull resources like CEOs, college professors or even finance attorneys that can ensure that extremely important introduction.
3. Have you ever heard of the 10/20/30 Rule of Powerpoint? It’s not really all that new, Guy Kawasaki talked about it in 2005, but even in today’s business environment it proves useful when you are trying to impress venture capitalists. In short, this rule states that your presentation should be comprised of only 10 slides, it should last no more than 20 minutes and use a font of at least 30 points. The slides should cover aspects such as: problem, your solution, the business model, underlying magic/technology, marketing and sales, competition, team, projections and milestones, status and timeline, summary and call to action.
4. Always be compelling. In some cases, even the best of us tend to be afraid of public speaking. And who says that they’ve never gone through it is probably a liar. However, don’t let fear and anxiety overwhelm you during that all-important presentation. You should incorporate things such as passion, sincerity and honesty; venture capitalists will most definitely be aware of it. They will perceive you as a person who really believes in what you are selling.
5. Show VCs that you’ve done your homework. Present them with facts and figures that show that there really is a market for your business idea. Don’t forget to mention your competition and show them what differentiates your company from their.
6. Also, be realistic. Instead of trying to be sneaky and tricking investors with made-up numbers, provide accurate information and the most important drivers for revenue. VCs tend to see right through that cloud of BS.
7. Don’t get fooled into thinking that VCs are out to get you. Usually, when they ask you a trick question, they only want to see the degree of knowledge and motivation that you possess. Never get offended regardless of the question and don’t beat around the bush.