Creating a start-up pitch that convinces investors to trust you with millions of dollars is a lot of pressure. And it’s not just about how great your product is, or how your projections for the next two years look. How you present the pitch is as important as what you are pitching.
To give you the best chance of success, we spoke with communication expert Colin James. Colin has worked for many decades with top level executives to build their confidence and help them secure and facilitate mergers worth millions of dollars. So here it is. Everything you need to know to help you deliver a pitch investors cannot say no to.
It’s all about the preparation
It’s a given that investors expect you to know your product back-to-front before the pitch. But Colin says you should also know your investors. Researching your investors gives you background knowledge you can use to your advantage during the pitch. For example, this might be knowing who the investors are connected to so you can help get some crucial introductions. Or it could be knowing their previous work experience so you can play on this point during the pitch. What’s more, once you know who you’ll be talking to, Colin suggests to ‘practice in front of them’. This means going into a meeting room, printing out headshots of your investors and sticking them to chairs. With faces on chairs you’re ready to start pretending they are people, beginning to remember them and learning them by name. “My clients usually spend 7 hours practicing and rehearsing with me. We go through the process step by step, line by line. We practice walking into the room, speaking and answering questions,” says Colin. “This affords you the opportunity to respond to questions by saying something like: Well John, as you spent 10 years with the Vortex Group you can understand…”. Investors take notice of these details, they know you’ve done your research and you understand your audience and its mandate. “Not being prepared is like a footballer running on the field without their boots,” Colin says.
The first 8 seconds count
In the above point Colin refers to practicing walking into a room. Did you know that the way you walk and stand could prevent your success? While we’re all taught not to judge a book by its cover, unfortunately we all continue to do so. Colin says within 8 seconds of you walking into the room the investors will have made a decision to whether they like you. “It’s such a simple thing. Body language and energy cues give off so much. You can tell straight away if someone is too cool for school,” he says. “You need to have a level of relaxed aliveness - some might call this confidence, but we have to be careful with confidence because sometimes it can be confused with smug arrogance.”
To achieve relaxed aliveness you need to:
- Rehearse, rehearse and rehearse some more
- Become comfortable holding eye contact: nervous people look down, shuffle their feet, and have fleeting eye contact
- Add a level of forced participation: always begin your presentation by asking a question and prompting to the audience to raise their hand. The questions should be framed toward the solution your start-up is offering and sway investors toward a yes answer. If you ask a question people are going to say no to, you’ve got the wrong investors. Colin warns that most won’t put up their physical hand, most will lift their eyes or nod. If you prompt them by lifting your own hand the investor is likely to mirror your actions.
- Be prepared to answer questions: Questions come in all shapes and forms and we’ll look at how to best handle them in a section below
- Smile, but don’t force it: Not smiling is a sign of terminal seriousness. People like doing business with people they like. “You don’t go on dates with people you don’t like, so why would someone give you money if they don’t like you? You’re forming a relationship with an investor. You need a genuine smile.”
Body language is important - you can’t really say you’re resilient you have to show it - but words matter too. And in your pitch investors have to make a tough judgement call about who you are as a person in a very short period of time. To help them reach the right conclusion, you want to clearly structure your pitch so it tells enough, but doesn’t go into too much detail. This way you will be able to deliver a strong message, but also help investors understand why your product is the best solution for the problem. Colin suggests structuring your content in the following way:
- There’s a problem
- There’s a solution
- Your product is the solution
- Why you; (credibility)
- Then ask
“You need to convince the investor it’s worth taking the next steps,” he says. “Investors don’t give you money based on the pitch, but they will become significantly interested based on the pitch.”
The important part is to minimise over-telling. “Keep it lean and clean,” says Colin. “Investors are smart. They don’t need masses of detail. Over-telling turns them off.” During the pitch give enough information away to show that you know your numbers, that you’ve crunched the data and made predictions and forecasts, but don’t feel the need to tell them everything. Leave this up to the investors to ask during question time.
How to handle questions
At least 3 hours of your preparation before any pitch should be dedicated to brainstorming questions you’re likely to get asked by investors. There are a number of types of questions you should be prepared for:
- Challenge questions: Do you have the capacity to deliver?
- Content questions: So what kind of manufacturing will you need to get that happening?
- Logic question: But if you do that, won’t this have this kind of follow on effect?
- Epistemological question: A question where the investor doesn’t have experience or can’t relate. You need to use a story to support and illustrate your answer. Q: I don’t quite see how this will work. A: Imagine if this happened and then you could do this...
Never say you know an answer when you don’t. In the case you get asked a prickly question you can’t answer off the top of your head, Colin suggests immediately acknowledging that you don’t know. Then ask to be allowed to get back with the correct answer. “By not pretending or skirting around, you’re showing confidence. And sometimes there just isn’t an answer. They might ask about 5-year projections, and you’re essentially asking for the investment so you can have more capital to accurately calculate those projections.”
Visual aids in presentations do have a place - but as an entrepreneur you need to be cautious about how you use them, especially PowerPoint, which Colin considers a major distraction. “There should definitely be something with your brand, a visual reference to your logo that captures your idea. Even a really compelling short video. But these things should only be used to add value,” Colin says.
He suggests using tabs with pre-prepared graphs to answer questions you’ve predicted. “There were many extraordinary things that happened before PowerPoint came along. Empires were built, global companies established, technological innovation expanded and wars were fought without PowerPoint. It has become a crutch and a dependency,” he explains.
Pitching to investors is much more than just knowing your product or offering back-to-front and inside-out. You need to feel confident in your ability, have absolute faith that your product is the right answer, and you need to have practiced every single scenario possible so your confidence isn’t jolted. By following the above tips you’re giving yourself a dramatic head-start to getting a yes answer from investors.