What else do I need for the perfect first pitch?

This is the third part of my blog about structuring your FIRST pitch to investors. 

Click here to read part one and part two.

Now the rubber hits the road. You’ve given your potential investors all the reasons why they should invest.

By this time you should have assessed the body language. What’s it telling you? Are they sitting forward just waiting to hear your deal, or are they watching the clock wondering when it will be a good time to shut you down.

The body language, comments and behaviour are all indicators that you must tune into. Their mood should determine just what you do and how strong you are in the closing part of your pitch.

POINT 8: COMPETITION

This is a very important point. You’ve got to show that your product has a clearly visible competitive advantage. You’ve got to make sure that your competitive advantage is explained and the investors understand why people will buy your product/service over the competitors.

Now you need to elaborate on the comparison between your product and your competitors. You need to know as much as you can about your competition. You need to understand their strategies, learn about their target markets and maybe even have a prediction as to what they may do when they get wind of your product as competition.

Who is your competition? In our example of wet-weather shoes (see previous postings mentioned above), your competition would be major, worldwide shoe companies, and also smaller companies who are more popular on a local level. For instance, if there happened to be a company that created knee braces geared to reduce injuries to runners when they actually do fall. They’re not a shoe company, but they are indirect competition for your market.

Talk again about why you are better. Talk about how your product is more individualised than a pair of mass-manufactured shoes from a major company. Talk about how your shoes are built of hi-tech materials that the local shoe company cannot access. Talk about how your shoes prevent the fall so you don’t need the knee braces.

POINT 9: ABOUT THE ASK

Don’t forget that way back in Point 1 of your presentation, you asked this group of people sitting before you for what was probably a large sum of money. Now is a good time to talk more about that money and what you plan to do with it.

Investors want to know what you will do with their money!  Provide these details:

•·        How the money will be used.

•·        Investors return on investment.

•·        Equity provided.

•·        Key milestones. 

You should provide figures of your existing financials for the last few years, as well as your financial plans for the next three years based on the funding that you will receive from an investor.

For at least the first year, your projections should be broken down into months or, at the very least, quarters, in your business plan. Use this information in your presentation. If the first few months of your business will be loss months, you need to show when you expect that to turn around.  You should also illustrate cashflow during these times, showing how much money you expect to be coming in and going out.

Most importantly, talk about their return on investment (ROI). The only reason they will invest is to make a bucketload of money. So tell them how much money they will make. You will not be able to do this unless you have detailed financial forecasts.

As well, are you offering a seat on the board and/or other inducements to invest?

The investors will not want to stay in the business forever. Explain to them what options exist to exit the business in the next three to five years. 

POINT 10: ACCOUNTABILITY

In this section emphasise that you are prepared to be accountable. If you plan to use your own personal funds for the business, they should be discussed here as well. You should discuss any draw downs you plan through the cycle of your business and give definitive milestones for profitability that include hard numbers, dates and/or elapsed time.

Draw downs from investors

You’ve also got to have a detailed list of how you will use the invested funds.

•·        When you need the money.

•·        How much you need.

•·        What you will use the funds for.

The amount you ask at particular months will depend on your cashflow projections. Investors do not want to see their money just sitting in your bank account. Look at your cashflow, where you are low on cash that is when you need to draw funds from your investor.

Look at your objectives and match objectives in particular months with the specific drawdown. As a guideline, depending on your cash burn rate, keep enough cash to cover expenses for three months. 

POINT 11: MANAGEMENT TEAM

In this part of your presentation, you will revisit your team. Now that you’ve explained the whole deal, you’ve got to prove that you’re working with the right people to make it happen. You need to demonstrate that you and your team can execute the plan.

You should talk again about whom your company officers and decision makers will be and their relevant experiences. You should list any successes they’ve had in their previous work, and how those successful experiences will translate to success for your current venture. Additionally, you should give details about any members of your proposed board or any advisors you plan to include in your business.

POINT 12: RECAP

This is your last step, the one where you summarise three to five of your biggest selling points to the investors. You should have three to five “must remembers” to leave a very strong message right at the close of your formal presentation. These are the key points that, should your potential investors forget everything else you’ve talked about, they will remember these points.

For example:

•·        Your return on this investment will be 37% a year.

•·        We have signed contracts with four leaders in our target market that amount to $730,000.

•·        Mike Holmes has left our major competitor and signed up as our marketing director on the strength of our technology.

•·        We opened our UK office six weeks ago and now have $130,000 in signed contracts.

•·        We have a signed five year licence agreement with Microsoft for supply of technology to incorporate in their product range.  We estimate this agreement will mean $4.7 million over five years.

Since this is the last impression you will leave with your potential investors, it’s got to be positive. This is not the time to talk about problems you foresee or hazards you predict running into. This is the time to leave your audience with a very positive lasting impression of you, your team and your product.

And be sure to invite questions! This is the time for investors to really get to know your team and your business. Let the investors have their say. If they do want to invest they will have lots of questions.

It’s a great opportunity for you and your team to really strut your stuff. It is a time to demonstrate your knowledge of the industry, the customers and markets and the technology.

And finally…

You need to do this in no more than 15 minutes with 15 slides absolutely maximum.

It will take practice to get down to 15 minutes but your effort will be rewarded. You CANNOT ramble on for 30 or 45 minutes. I don’t care how good the deal is or how sexy the product is.

No matter how hard you think this is you must achieve it. I have yet to see a team of entrepreneurs who were not able to reduce long tedious pitches into 15 minutes. And you can do it too.

Have fun, these will be the times you tell your children about.

Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site www.pitchingtoinvestors.com with tools and tips about how to develop killer presentations to raise capital.

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