Many times, entrepreneurs are intimidated when it comes to pitching a startup to a venture capitalist investor. After all, you’re talking to someone who is extremely smart and has been remarkably successful in the industry. Statistics show that a new record was set in 2021 for venture capital investments- around $330 billion. This is almost twice as much as in 2020. There are lots of clever founders and amazing ideas being presented- how can you prepare to pitch your startup?
First of all, you need to approach this with the eyes of a venture capitalist. Since there are so many different pitches and opportunities to invest in, they typically establish a set of criteria that they use to evaluate an opportunity. Pretend you are an investor and think about what you’d like to know about the startup. This will help you build your pitch.
Even if your idea is fantastic, there’s always a risk of fumbling before you even get started with your pitch. In this article, we’ll look at 4 questions you should use to prepare your pitch.
4 Questions
When preparing your pitch, there are four questions you should keep in mind:
- What problem are you solving for consumers?
- Why is now the time to invest in your startup?
- What are your qualifications?
- Do you have a team to help you with this vision?
What problem are you solving for consumers?
Investors prefer investing into products or services that are groundbreaking, competitive, and have the potential for long-term success. A successful pitch shares solutions to real-world problems that other companies have not solved.
Think about who would need to have/use your product. Is this something that consumers can’t live without? What is it that makes your product better or different from other similar ones on the market? Are you offering people a reason to change their habits? If they are already using another product or service, why would they choose yours instead?
Take some time to truly consider answers to these questions and include those answers in your pitch. Be sure to answer the tough questions before the investor even has a chance to ask them.
Why is now the time to invest in your startup?
Most venture capitalist investors are going to want to know why now is the time to invest in your startup- from both the current stage of your startup and the market perspective.
They are going to want to know that your target market is large enough to generate a good return on their investment. They also want to make sure you have what it takes to capture a piece of the market.
Why is it that your idea is going to work now and why hasn’t it worked in the past? Proving that your business will target an existing opportunity is critical for gaining the attention of venture capitalist investors.
When it comes to timing, a venture capitalist is going to want to know your growth and revenue milestones and your timeline for reaching them. They also want proof that your business is viable and has traction in your core market.
Make sure that you have this information available for your potential investors in a detailed, realistic timeline.
What are your qualifications?
Your story must be a major part of any successful pitch. Venture capitalist investors are investing in the people behind the idea at this point. Therefore, it’s important to have a determined leader with a clear vision.
Make sure to include any prior successes in your pitch. Venture capitalists also want to see that you are confident in your pitch. Make sure that your pitch includes your best attributes, such as your presence, your drive, and your passion.
Transparency is critical- especially at this point. Don’t be afraid to show your vulnerabilities. After all, there is no entrepreneur in the world that is strong in every area. You should be 100% honest about your weaknesses and how you plan to hire others to fill in those gaps.
Finally, your pitch must also show that you are coachable. Be willing to listen to the venture capitalists as they advise you and your company. After all, there’s a reason they are successful.
Do you have a team to help with this vision?
In addition to knowing more about you as a leader, a venture capitalist is interested in your team. They want to see that not only is your idea unique- but that you have a team behind you that can help you see this vision come to fruition.
Make sure you’re ready to discuss the expertise of your team members and provide a list of qualified people that will be placed in key roles throughout the development of your company. If you don’t have a team in place, share your hiring plan. Finally, a venture capitalist wants to see that your team will do what it takes to overcome challenges and that you all share the same vision for success.
You must also be prepared to address your team’s balance. Is there a marketing guru on the team? What about a product expert or a sales leader? Take the time to address any imbalances and how you plan to fill the gaps. Prove to the venture capitalist that you have a strategic plan for building out your team. Again, they are not just investing in your business, but the people behind the business.
Conclusion
Basically, it all comes down to this: the best way to prepare your pitch is to look at it from the eyes of the investor. Consider what you would be interested in learning before investing and then use those questions to build your pitch. If you need help with venture capital funding, contact Rustwood Capital today.
