How to ensure your funding approach is pitch perfect
As an entrepreneur with a new startup, one of the most important weapons you have in the armoury is the pitch deck. It’s the business story, its differentiation, and whether it communicates in a digestible form the essence of the business.
Funders see thousands of pitch decks every month. Your deck should find a way to cut through the clutter and adapt to tight time schedules.
The pitch deck should be accurate. Entrepreneurs are prone to hyperbole. They are optimistic and believe they will achieve those big results.
In the US, a well-known local entrepreneur is being indicted, with some of the key charges being that he presented untruthful, exaggerated information on his decks. — shortcomings or fears about the business. It will build trust and credibility with a future partner. And Be’honest it s the right even thing about to do. your
Tech people love to baffle with jargon. They may think it makes them look clever, but it does not. The pitch deck’s job is to communicate, not obfuscate. Otherwise it will create suspicion and confusion, which means funders are unlikely to move forward with you.
Use simple, clear English. If there is a complex concept (such as a peer-to-peer decentralised cryptocurrency exchange platform), you can’t avoid complexity. But if your funder is not in the same game as you (because they are in the investing game), provide analogies or real-world examples. This is a communication job, not a marketing job.
Never say you have no competitors. That is a surefire signal to the investor that you are not sure about what you are doing or don’t know your market well. There are always competitors — direct, indirect or in the future. A competitor doesn’t have to be another company. A competitor may even be an entire industry or an old way of working. It is hard to believe, but companies such as Facebook and Google had competitors. Anyone remember Friendster and Myspace, or the search engines AltaVista, Excite, Lycos and WebCrawler?
The most important bit is the elevator pitch. It’s the opening statement. It’s the first impression when everyone is sceptically sizing you up. The elevator pitch is a simple statement, no longer than 20-30 seconds, that is the essence of what the business does and the problem it solves.
It’s harder than it seems. It’s easier to write a complex paragraph full of waffle, but harder to compress to an essence. If you can’t do this, investors will think you are confused or unclear about the business or will battle to communicate it to others: future staff, customers and investors.
It would be good to be upfront about how much money you need, and what you intend to spend it on, but you don’t have to show numbers at this stage. Once the investor has bought into you, you can start wading through spreadsheets later. You also want to emphasise the investment will go towards scaling the business and maximising shareholder return. Don’t start talking about increasing your salary at this time.
In this process, investors are not just looking at your business, they are looking at you: how you answer questions, are you transparent, do you flap under pressure, are you defensive? They will be thinking to themselves: “Can I work with this person?”
They want a “coachable” entrepreneur who is receptive to advice. It’s not just about the money; they want to help you with business advice and networking too.
Don’t approach a funder unless you have a product or prototype to show. To prove your business model works, it would be better if your start-up is producing revenue, but it does not have to be profitable.
Never go directly to a funder. Get an introduction. Scour LinkedIn and Facebook for people in common or call in favours. Funders see so many people that you may blur into the crowd. But referrals stand out and have credibility.