This is the Age of the Entrepreneur. Never has entrepreneurship become more attractive that it is today that students are encouraged to turn down corporate offers and establish their own businesses and ventures. But, before you set out to do that, use these tried-and-tested tips to help build that perfect pitch, which investors won’t be able to turn down.
Get the story right: There are myriad reasons why one sets up a business or a venture. It is necessary to ask oneself the Why—the reason for becoming an entrepreneur. It could be something very personal or maybe a great business opportunity. Whatever be the case, get your story right because you will need that vision to channel the business as you grow.
Be clear on the core problem and your solution: Make the pitch short and simple as you probably would have less than a minute to make a compelling case. Investors listen to start-up proposals all the time and it would be prudent to ensure that your proposal talks about the core problem that the start-up will be addressing and how.
Detail Evolution of Product / Service: Your proposal should include details of how you see the product or the service offering evolving in the first three years. This would give investors a very clear idea about how the entrepreneur sees the start-up flourishing and its financial feasibility.
Know your split: It is necessary to know your numbers in advance. This will help you in figuring out how much equity you are willing to split with the investor. Depending on the funding they are willing to put up, some investors will want a lot of equity and some other kinds of incentives. Whatever the case, have a good idea of what is a reasonable split.
Be open minded: One of the biggest problems that most investors face is the lack of willingness on the part of entrepreneur to listen. You need to leave your ego at the door when you seek funds and be open to the suggestions that are offered by the investors. Investors will ask numerous questions about the product/service and sometimes offer suggestions to change the business model or technology platform. Take the time to consider the questions and suggestions and view them as insights.
Know your investor: It is imperative that you do your homework on the investors before you approach them. Investors have different preferences in terms of the type of business or industry, the level of risk, and what stage the start-up is at. Entrepreneurs should make an effort to build a relationship with the investor rather than just viewing them as a fund source.
Show your conviction: The investor wants to know that you’re doing everything possible to take advantage of every opportunity that is being given to you and working 24*7 to make the company a success. This conviction should shine through your presentation and pitch.
Keep a realistic valuation: An investment discussion should never begin with how much the start-up is worth. Experienced investors will be able to give you an idea of the start-up’s valuation and even the entrepreneur must set a realistic target of what he/she can expect in the market. Valuations may be adjusted based on the strength of the management team, location of the business, industry or market.
Have clear knowledge about market: Do your research before you decide to take the entrepreneurship plunge. Know your market. Is the project viable? Are there many companies in the area that you are looking to enter in? Is there a demand for your product and service? If so, what can differentiate you from the rest of the crowd? Doing proper due diligence will hold you in good stead as it could very well be the difference between success and failure.
Who’s your competition? Never say that you don’t have competitors. It is either a sign of arrogance or naiveté. Either you are limiting yourself to direct competitors or you are not looking hard enough. Once you do identify them, then ensure that you understand their business strategy, their strengths and weaknesses and it should be listed in your business plan.
Hope you can put these tips to good use and may 2017 see your start-up blossoming!