Turn great business ideas into bustling enterprises by understanding what your potential investors want.
Raising funds is a crucial part of every entrepreneur's journey. After all, a great business pitch is something that sets apart the good from the great. Every entrepreneur must overcome this obstacle, to get his startup business off the ground.
My advice to anyone who wants to raise funds for their business is, build an effective business proposal. This proposal is the first weapon in your arsenal and it will help gain the trust of potential investors. As an entrepreneur, I can promise you there is no such thing as a perfect pitch. There are however successful pitches. These are about understanding what your potential investors want.
A great investor pitch comes from healthy dialogue.
So instead of simply pandering to your investor’s wants, indulge in healthy debates. I remember when my husband and I founded CashKaro.com back in 2013 we did exactly that. We raised Rs 5 crore from London-based angel investors and what we gave them was perhaps the hundredth version of our pitch.
Using this first push of resources judiciously, we tied up with prominent retailers and managed to drive sales worth Rs 25 crore to them within the first six months. This helped us in subsequent rounds and in 2015, we raised Rs 25 crore from Kalaari Capital. The following year we got none other than Ratan Tata to invest in us. This helped us achieve a GMV target of Rs 1000 crore.
Sounds wonderful, doesn’t it? But would our very first pitch have worked on investors? Would they have invested in us had we not practised our pitch to perfection? Probably not. So what helped? We empathised with the investor at each stage and I strongly recommend you do the same thing.
Give potential investors information that proves your venture will be worthwhile. Convince them it will be profitable with facts and numbers.
Brood over questions and identify what makes your business unique and interesting. Get a proof of concept and prove that you have a target audience. Help them understand how you will scale. Let me try to break this down into actionable steps.
Confused about where to start your pitch?
Initiate dialogue with a simple and clear agenda.
Summarise all that you want to discuss and don't pull any surprises. Give a broad overview of your business and strategy while explaining how you plan to make things work. If there is anyone who needs to know how you will be profitable as much as you, it's your investors. Help them, help you.
For the investors, it is more important to know who they are investing in.
They want to make sure that the people or talent they are investing in is worth the effort. So show them who runs the show for each part of your business. Tell them how you nurture talent – most startups fail to build and maintain a good team. Show them you’re not one of those. You can even ask them to help you bridge gaps in terms of talent. They need to know you are aware of both your strengths and weaknesses. Remember, no entrepreneur succeeds alone!
Don't fear competition; show them how you will fight.
Let them know how you will beat your competition. Do you have any particular strategies? Are there factors such as pricing, distribution, acquisition, etc., that give you a competitive edge? For instance, one key advantage we had when we launched was that most other sites only offered coupons. CashKaro Cashback was (and still is) on top of all those coupons. This was a clear benefit for customers as it doubles their savings.
Investors need to know what their investments will lead to.
So, be specific about your revenue plans. This will also help them decide how much money you need to raise. For example, CashKaro works on an affiliate monetization model. That means we receive a commission for every sale we drive to our retailer partners. We then pass on a large portion of this commission to our users as CashKaro Cashback.
While there's never a checklist to perfect your pitch, I hope this advice helps some great business ideas mushroom into bustling enterprises. Just remember to do all your legwork before you go for investor meetings.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)