The perfect pitch

Our Catalyst Centre tenants were thrown into the daunting world of pitching for investment by Simon White, Partner & Co-founder of Altitude Partners. Simon made the whole concept of the perfect pitch seem simple with six steps to prepare well. Here’s the inside track.

1. TELL THEM ABOUT THE BUSINESS: What does it actually do?

It might seem too obvious but so many people focus on their technical prowess and investors don’t want to hear all that – they simply want to know about the business proposition and how it will make money. Don’t be patronising but don’t use acronyms either – it’s best to assume they know nothing to ensure that you don’t leave out or gloss over essential detail. Of course, it’s important to be honest about the business’s current position too (don’t tell them you are in a 3,000 sq ft office space when you’re really working out of your loft!) If they like you and choose to invest in you, there will be a lot of due diligence work undertaken and they will find out the truth soon enough.

2. TELL THEM ABOUT YOU: Why should they invest in you?

Keep this bit brief. It’s not like applying for a job where you have to go over every detail in your CV, but you do need to highlight your personal strengths and be honest about your weaknesses. They’ll want to know why you set up in business and the skills that you bring that will make it a success. Remember that you are selling yourself so try to keep a positive spin on it.

3. TELL THEM ABOUT YOUR CUSTOMERS: Who is your business targeting and how?

Here, you need to cover the marketplace and customer profiles, outlining what problem your products or services will be solving for them. Be honest and realistic about your competition, ensuring that you’ve fully researched this so that you can benchmark your business and be in a position to answer any questions that may come your way.   Discuss how your offering is different and how you will reach your target market. Also take along any evidence of sales to date or letters of intent as they show a genuine interest in what you’re bringing to market.

4. TELL THEM ABOUT YOUR FINANCIALS: What’s the current and forecasted position?

First off, if this isn’t your strong point, get help! That’s what accountants are for and you need to know your figures inside out and backwards – it doesn’t look good if you need to check for answers to questions – and there will be many questions in this area. Have historic figures if applicable and always prepare a minimum three year forecast using realistic assumptions that enable you to pay yourself the market rate. Remember too that cash is king – you could be trading profitably but if there is no real money in the pot, you will go under and investors will be looking for reassurance on cashflow.

5. TELL THEM ABOUT THE OPPORTUNITY: What do you want and what’s in it for them?

Give them a clear summary of the financial opportunity, show awareness of the risks involved but highlight the potential rewards. Some investors will have a genuine interest in your company but money is ultimately the end goal and they need to understand how they will achieve a return. Be realistic about how much you need and how the funds will be used. At the same time, go for what you need in one hit – multiple funding rounds are time consuming and can lead to too many investors which can be hard to manage. Once you have feedback on the potential investment, go back to base and do two forecasts: one where you take investment and one where you don’t and see what happens to your business. If it’s bigger in four years with the investment – take it!

6. CONSIDER YOUR PRESENTATION: How will you deliver a compelling and memorable pitch?

It’s very easy to get so wrapped up in the content of your presentation that you forget about the delivery.  Firstly, stick to the pitch materials that you’ve prepared and don’t skip around or you’ll lose your way and omit important details. During questioning, if you don’t know an answer, be honest and explain that you will find out. Leave wrap-up materials such as branded products and email across your presentation as a follow-up.  Above all, demonstrate that you have energy, passion, knowledge, integrity and a hunger to succeed!

Before you leave, Simon suggests that the investors should be prepared to pitch to you too. Ultimately £1 is £1 wherever it comes from, so be sure that you choose the right people to work with, not just the first opportunity that comes along. It’s not arrogant to ask them to outline their contacts and experience and what else they would bring to the table – it’s just good practice and it demonstrates that you’re smart and serious. If you come out feeling that the meeting and negotiation has been a battle and they are desperate to win they probably aren’t the right partner for you because they’re likely to be too aggressive for a start-up.

Finally, remember that it’s not like Dragon’s Den so don’t be disappointed if you leave without a firm offer – they won’t discuss the detail in front of you or make decisions that quickly. There will be follow-up conversations and a lot of due diligence before an agreement is reached.

Still feeling apprehensive? Take a look at the ten worst pitches on Dragons Den to get your confidence back up!