How and where to pitch for investment opportunities
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Posted: Thu 15th Sep 2022
There are various distinct categories of funders, including private investors and grants.
Professional investors always look for established revenue streams and tried-and-true business concepts to lower their risk exposure. Then, they research the individuals behind the model, the present status of the execution, and the prospective means by which they could receive a refund.
Your proposed use of their funds will be considered in relation to these three contexts. They will examine your business plan for details regarding cash flows and return on investment projections.
In a similar manner, as a business owner, you must examine and validate the several available options. Determine as much as you can about each potential investor, including the proportion of companies they have backed that have achieved growth and financial success.
Remember that different lenders will provide diverse purposes for their customers. While some investors want to take an active role, others prefer to take a more passive role.
You are required to take this into consideration when making your selections.
Then, it is imperative that you have a good relationship with your financier. When you've reached an agreement on terms, the real job may begin. After that point, you and your investor partner will each share the responsibility of ensuring that your idea is a resounding success.
It's not easy to articulate the value of a product or service. Having a clear and concise pitch can help you and your business stand out. A pitch could help you meet investors and persuade them to invest in your firm or provide financial assistance.
This blog post explains the processes required to produce a successful pitch, as well as funding suggestions.
Pitching
Let's start with what has proven effective in previous years when selling an idea to investors. The days when a complete business plan was required are long gone.
Despite the fact that your business plan is still a vital tool, a three or four-page pitch can also be effective. If you have been to our website, we have referred to it as a 'lean business plan'.
With the backup of business software that simplifies this process, we use a dashboard to review your existing data if you are an existing business.
Otherwise, forecasting works for both new and existing businesses. This is part of the indicators that investors require to see in your pitch as it tells them a story about your business concept. In addition, you must clearly define or describe the business in two sentences.
Relevant to the pitch is the market problem or opportunity you are addressing, as well as your solution to that problem. Will you be meeting a genuine unmet need?
Briefly describe the market and people who will benefit from your product or service, as well as the appropriate sales and marketing channels for your product or service, keeping in mind the various sectors of your target market. Mention existing clients in your pitch if you have them.
In addition, investors are interested in your unique position and may enquire about your competitive advantage and the amount of capital required to bring your business to market.
Patents, copyrights, trade secrets, trademarks, and domain names are crucial to the success of your commercial endeavour and presentation. To have the legal right to use any of the properties, it will be necessary to demonstrate that the corporation is the owner.
This method has been employed for more than three decades. It is a concise and condensed business plan that includes the names and experience of the business' founders.
In addition, it includes information about new teams that may be added in the near or distant future in order to achieve the stated objectives.
This enables investors to understand more about the team's experience in the relevant industry and why they are the most qualified to execute the business plan.
The brilliance of the lean business plan pitch is that it also highlights important turning moments or pivotal turning points for your firm, making it excellent for business owners who are not seeking financing.
If you are pitching, use conversational language; if you are presenting, use professional language. Your financial plans will be scrutinised, so keep that in mind.
Ensure you have a clear budget to back your estimates and the requested amount of funding. Indicate how much of your own money you will be contributing to the firm if you plan to invest your own funds.
Investors are interested in expected profits because they wish to recoup their investments. Due to unstable market conditions, you should not establish long-term financial projections; unless otherwise required, financial estimates for up to three years should suffice.
Who might provide funding to your business?
1) Self-funding
At first, the majority of start-ups are self-funded using savings, borrowing from a retirement account, or taking out a home equity loan.
I would be sceptical of the last one, but it is a possibility. The initial danger associated with this type of fundraising is that if you fail, and if this is your only house, you may find yourself in serious financial hardship depending on the amount required to repay.
2) Family/friends
Individuals in your immediate circle could be an excellent source of initial startup financing.
After all, they are already aware of your identity, your prior actions, and your level of trustworthiness.
The risks unique to this sort of fundraising are that they may be less interested in your company strategy and less willing to invest or lend to you depending on your personal characteristics that they know and may cause them to not take you seriously.
Another is that personal relationships may be jeopardised if conflicts or misunderstandings occur.
3) Bank loans and micro credits
Low-cost lines of personal loans are an option if you're willing to take on some risk.
Your lender may also be able to help you get a credit card. Factor in the fact that you'll be expected to start making payments right away on the agreed terms.
If you have a low risk tolerance, discuss obtaining a low-cost line of credit with your bank or building society.
Additionally, you may be able to acquire innovation loans.
4) Angel investors
Most cities have wealthy individuals willing to invest in exciting local company prospects. These are angel investors from the TV show “Dragon’s Den” or "Shark Tank."
Some angel investors will embrace start-ups if the people behind them have a track record of success.
The disadvantage is that you may have to give up a significant stake in your firm (up to 60%). Alternatively, you may receive crucial experience and contacts from someone eager to help you succeed.
Relevant resources
Connect with Cecilia on Enterprise Nation for more brilliant business support.
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