Did you know we speak at approximately 130-140 words per minute?
Throw into the mix adrenaline and you might even make it to 150.
The problem is, if those 60 seconds happen to be a pitch for investment, the audience you are addressing will not remember much about it. You will have raced through it, and the likelihood is, you will probably have missed your mark.
You might get three minutes for your investment elevator pitch; perhaps you are lucky enough to get six minutes.
The problem for entrepreneurs is there is no one size fits all. Every scenario is different, so agility is key to any training I do with clients who pitch for investment.
Whatever length your investor pitch is, there are some fundamentals you need to consider – so choose key areas appropriate for you and the stage your business is at.
Elevator Pitch Fundamentals
Get your message across
This is the very basics of the investment pitch. You need to make sure you are conveying your message. Be honest with yourself and practise with people outside the business to see if your message is getting through.
Get your personality over
You are critical to this whole operation. Not only is it your business, but investors want to work with people they can trust and build a rapport with, just like employees. So if you hide your personality, you run the risk of underselling a critical asset.
Rate of word delivery
Aim for between 130-140 words per minute. Less is more. So don’t bombard the audience with lots of ideas; keep it brief and make sure they retain the main ask.
As we touched on in our other blog about presentation skills, don’t be scared of silence. Adrenaline will make pauses seem longer to your audience than they are in reality. Silence will help your audience understand your pitch better.
Don’t try to bamboozle your audience with overly technical descriptions. While investors may have an industry background, very often they will not necessarily have the comprehensive knowledge of your specialist area. Keep it simple and straight to the point.
Now we have some fundamentals, here are a few areas you need to cover off in an investment pitch if it is appropriate to your business stage. The following is a guideline; you don’t necessarily have to follow this order.
It can be easy to forget that others are hearing to this for the first time.
So make sure you detail the problem. You might not have much time, so it will need to be distilled down into a matter of sentences. When you discuss the problem your product or service is solving, you also need to convey the addressable market.
When you present the addressable market, a word of caution: while the whole world might benefit from your product, your addressable market is not seven billion people. You must be realistic about the people who are likely to purchase your product.
Assessing this market involves segmentation and targeting. That addressable market will have similar traits. They will have similar issues that are being addressed by your product. They will also have the capacity to buy your product. This is crucial because, while every person or business may need your product, how many are really in a position to buy it.
While the detail of your product is essential, it is how you convey the information that is critical. If you stray into oodles of detail, not only will you likely run out of time, you will also lose the attention of your audience who will not have the depth of understanding that you have.
While the investors you are pitching to are by no means uneducated, you need to find a way of describing your product related to your target market and how it will improve their lives.
As part of this section, you also need to address the competition for your product or service. The likelihood that there is no direct competitor to you is low. Even if you have created an entirely new market, your target market is presumably managing to solve the problem by some means and will need attracting.
So, from an investor’s point of view, ‘what makes you different?’ and more importantly, ‘what makes you better?’
Investors will be laser-focused on the team you have in place. To invest money in your project, they need to be convinced that the right team is at the helm and has what it takes to make it a success.
One anecdotal stat suggests that investors tend to break their assessment down by:
- 10% – the concept/product
- 10% – the IP and protectability of the product
- 80% – the team
Finding the right balance in your leadership team, with the right CEO, is essential. However, the right CFO, CTO, CMO, and board members or advisors will make a big difference. The skills you have within the rest of the organisation will be considered, but make sure you detail your leadership team within your pitch.
Sales and Marketing
A business that is already making money is a far more investable proposition. It will have an existing client base from which to build and a product on which people are willing to spend money.
It is therefore important to describe your sales and marketing strategy to your investors. Existing revenues are good, but how will you grow your customer base and increase the revenues that will warrant the investment?
Finally, you need to be sure on the level of investment you are seeking and how you plan to use it. While the level of detail doesn’t need to be forensic, you should be presenting a plan for the investment that will allow investors to assess if you have the business acumen to ask for what they deem essential.
Be Ready for Questions
While the pitch may only last a few minutes and the level of detail within your pitch might not be at a granular level, you must possess a forensic knowledge of your business.
Consider what questions your pitch will prompt, as well as any you feel less comfortable handling and practise answering them.
These are just a few of the areas to consider in your pitch. There are fundamentals to consider in the delivery and critical areas to think about based on your business stage and the type of investment you require.
But the critical element of my training is helping you become agile enough to present precisely what is needed in any given situation.