An investor pitch meeting begins much before entering the conference room and runs for much longer than after the presentation is over. What happens before and after the presentation is as important as the presentation itself.
All three stages require their own preparation and have specific takeaways for founders. Here are a few tips for founders which can help them prepare for what comes before, what happens during, and what should be done after, an investor pitch:
A. BEFORE THE MEETING
1. Do some soul-searching
It might sound dramatic when put like this, but before reaching out to investors founders need to do some soul searching to assess whether this is what they want. You need to be sure that you are in it for the long haul because by raising money you would be committed to your investors, employees, and customers. Raising capital would bring in a lot of expectations and responsibilities. You need to make sure that you have the growth, traction, and numbers before seeking funding. Ask yourself if you are ready to part with equity and accept the changes in your role that external funding would bring.
2. Know whom you are pitching to (are they even the right people?)
Thesis-fit. Criteria-fit. Investment-fit. These are more than just VC terms. These are serious considerations for founders to deliberate BEFORE contacting a VC firm. Even before establishing contact with venture capitalists for a meeting, founders need to take an honest decision about whether or not they want them as a partner. Ponder over whether or not your idea and business model resonate with them or not. Does the theme and geography of their past investment match your requirements? Do they target a similar investment stage?
Look up their website, past deals, and interviews to learn everything about the potential investors you intend to pitch to. What are their interests, personality, and temperament? This will be a cue if the investors will be willing to invest in your company or not.
Picking the right investors can make a significant difference to the outcome of your pitch meeting.
3. Hone your storytelling skills
Research says that when we hear facts, only two areas of our brain light up, but listening to stories increases neural activity five-fold. And believe us you want to capture as much attention of your investors as possible.
As a VC firm, it's our job to hear startup pitches, but we engage much more when the founders can inspire us with their stories. We don't want to hear only your idea; we want to hear about the inspiration behind it. We want a peek into the people who helped you design your company policies & strategies. Along with the financial projections we want to hear about the efforts that will help you achieve those numbers.
When meeting your team members, we want to know the reason why someone has a particular role and someone else has another responsibility. We want to be able to picture ourselves in your shoes and feel the pain of your struggles and the joy of your accomplishments.
B. DURING THE MEETING
1. Treat your pitch like your first date
Meeting investors for a pitch meeting is like going on a first date. You wear your best suit, book a good place, roses, champagne, you get the picture. You only have a shot at making a good impression, so you prepare.
Some of the best meetings we've had were with founders who mastered their pitches. They were brimming with energy, charisma, and confidence as they delivered what were lines they might have practiced again and again but in a comfortable and conversational way. They had all the key information on the tip of their fingers. Be it information related to their product, target audience, business strategy, financials, or exit strategy, their pitch deck and delivery helped us visualize their data.
Conversely, there have been instances of founders mumbling answers to questions they weren't prepared for or worse contradicting each other mid-sentence, reflecting a lack of readiness.
2. Leave no stone (detail) unturned
VCs are renowned for analyzing all aspects of a business to ascertain its viability, and they rely on data and proof of performance for this. Provide investors with tangible evidence of how your product works through a minimum viable product if possible. Outline your go-to-market strategy and accurately describe your competitive landscape. In your pitch, you need to cover everything from potential risks to your business and provide proof of your founder-fit. The more information you share with the investors, the more data you provide them as proof of performance, the more interest they will have in financing your business.
3. Prepare for difficult conversations
As in any negotiation you need to mentally prepare yourself to specify the final ask - the investment amount. It can be intimidating to ask for a specific amount of money, but being vague can cause more damage. Imagine asking for investments between a million and a million and a half dollars. There's a huge difference between the two numbers and the fact that founders don't see this is a big red flag. Being specific about your investment needs and how you will use this money to win shows that you have visualized a financial road map with clear goals and don't take investor capital for granted.
Investing is a high-stake game and investors will have questions regardless of how flawless your pitch is. Try and anticipate what those could be in advance and brace yourself for some hard questions.
C. AFTER THE MEETING
1. Follow up (multiple times if required)
Following up with potential investors is an essential part of the fundraising process. There is still a lot of work to be done even after the meeting with your investor concludes. Instances of investors giving a yes or no after the first meeting itself are rare. You might need to follow-up to change this and (hopefully) elicit a yes. To convince your investors to spend more time researching your company or prioritizing your company over others (as they receive a high number of requests), email them your pitch deck, company material and response to outstanding questions from the meeting.
2. Out of sight does not mean out of mind
Regardless of the outcome of the meeting, use this opportunity to build your relationship and network with your potential investors. Keep in touch by sharing progress updates to develop a relationship that might become a long-term partnership. Stay on their radar by connecting on social media platforms and network with other players in the VC ecosystem as well. This kind of outreach is important and can be pivotal in the early stages of fundraising.
(As in life) there are no guarantees in the investment world
Like in life there are no guarantees in the investment world. The tips we have shared above do not warrant funding. However, they will help ease investor concerns and instill greater confidence in your business model, which in turn can lead to greater chances of fundraising success.