Investors are a breed apart. They need little information and more confidence. They look forward to fewer details in your business plan and pitch. The concerns that they seek to be addressed are:-
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- Vision and Value Proposition: They need to be briefed on the objectives, proposed plan and vision that promise wealth creation through your business description, which should not exceed 150 words. It should make clear how the business will create a difference in the lives of the end customers, investors and stakeholders in simple language.
- Business Model: The business model should present to them a professional yet down to earth plan of a business in the offing. The business model should be addressing a real life problem with a viable, profitable solution. The business model should be simple and robust; it should be able to foresee all risks and make adequate provision for them.
- Market Understanding: Clear understanding of the market, its conditions and competition should be showcased. It is necessary to communicate the details of Total Available Market (TAM), Segmented Addressable Market (SAM) and Share of Market (SOM) for the first few years. He or she must also be made aware of sales and marketing plans that shall be employed. Present how you shall fit into the competition landscape and what gives you your edge over the competition.
- Validation: The investors bestow confidence in your business banking on your confidence in your product, process and team. Present the team behind your idea. If sales are already on board, cite and quote the satisfied customers. This will increase the confidence of investors. If in possession, present validation from the investors already on board to establish your profitability.
- Financials and Forecasts: The presentation should be very clear about investment required and project realistic Profit and Loss Statements, Cash flows statement, ROI roadmaps and margins available. The projections should provide the investors with as realistic a picture as possible for at least the first three years from the start. Back up your projections and claims with all possible evidence. Investors look out for detailed accounts of investment required, how startups plan to use the invested money and expectations of results in terms of objectives of the business.
The presentation should invariably cover the above points. It is not only what is said but how is it communicated that is important to impress the investor. The six secret steps involved in communicating your business plan to are-
- Tell a Story: Your business pitch should be like a story that is compelling and interesting. Don’t use excessive bullet points in the presentation and instead use pictures or other collaterals which will not only enhance the interest of the investor but also capture his or her imagination. The story should encompass the problem in the world that you want to address, your solution and how you intend to make a difference in the current situation.
- Keep the Presentation Simple and Short: The presentation should be simple, with the business process broken into small and logical steps. Avoiding jargon and complex sentences would do the presentation a world of good. A simple, straightforward presentation with high-level ideas will have a better impact on the investor. Leave enough room for the investor to ask questions.The smaller the presentation, the more time the investor will have to ask questions about the business. Provide demos and collaterals in favor of the business and have discussions regarding the business. If you have a one hour meeting, aim for your presentation to take 20-30 minutes.
- Ethics and Passion: The presentation should use words that bring forth your idea of business ethics, integrity and passion towards your business. In short, the presentation should touch the heart of the investor. The investor should be driven by your belief and conviction in the business by virtue of the presentation.
- Know your Numbers: The presentation should clearly outline the financials and forecasts of the business for at least three years from inception. The market opportunities should not be overstated. The assumptions and valuations need to be as realistic as possible. Allow for a 10 percent deviation from average expectation of ROI and margins.
- Ask for money: The purpose of a pitch is the money, so never forget to ask for investment. Often entrepreneurs forget to ask for investment at the end of the presentation. Bring the topic up diligently to the surface as you would discuss how much money you need and how you plan to use the money.
The key to a good presentation is the result, and an investor’s probability of investing can be gauged only by his or her interest in the business and the numbers related to it. If the investor had a good number of questions answered intelligently to satisfaction, you can consider yourself to have done good job.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory)
Related read: 5 things VCs say and what they really mean?
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