Early-stage financing is the lifeblood of every startup, but raising funds is a challenge for many entrepreneurs. According to Rick Ritter, the CEO of IdahoTechConnect, an articulate finance pitch can be the difference between receiving $10,000 or $1,000,000 in funding.
IdahoTechConnect is a statewide entity that helps entrepreneurs attract investment dollars and commercialize their ideas. Ritter frequently teaches entrepreneurs best practices in pitching investors – a skill so urgently needed that he helped organize an annual finance pitch competition called TechLaunch.
I had the privilege of having Ritter teach me the difference between a $10,000 pitch and a $1,000,000 pitch. There’s a fine line between good and great, so here are 5 main points to consider when preparing your pitch to potential investors.
1. A good pitch demonstrates your competencies; a great pitch showcases your passions. Most entrepreneurs do well at presenting their qualifications, but a winning pitch goes beyond a summary of your business experience. A million-dollar pitch shows that your passion will allow you to move any mountain, overcome any obstacle, and do whatever it takes to make the dream a reality. You demonstrate your passion through the energy you bring to your presentation, sharing personal experiences, and your choice of words. Take time to consider why you are passionate about your business and determine how to convey your enthusiasm.
2. A good pitch demonstrates your product; a great pitch establishes your unique selling proposition. A good pitch demonstrates the value of the product and explains why consumers will support your business, but a great pitch takes this a step further. A great pitch will clearly brand your product as standing out from its competitors. Specifically demonstrate how your product resonates with your target audience and show how you’ll add the “special sauce” that differentiates it from its competition.
3. A good pitch talks about the problem; a great pitch creates a memorable narrative. Most entrepreneurs recognize the value of discussing the problem their product attempts to solve, but not everyone does a good job making their story memorable. Tell your investors a compelling story about one of your users. Help investors feel your customer’s emotional resolution when using your product to meet an unfulfilled need. Investors recognize that consumer emotions influence their buying behavior, and presenting a memorable narrative will strengthen your case.
4. A good pitch is complete; a great pitch is compelling. Doing your homework is a critical part of obtaining financing, but a great pitch offers additional information that makes your business more attractive to a prospective investor. Briefly highlighting features like diverse/low-cost sales channels, previous startup success, strategic partnerships, and other relevant information helps build your case. Remember, your pitch needs to reduce the financier’s fear of risk and increase their greed for gain.
5. A good pitch is detail-oriented, a great pitch is concise. Providing details that help investors evaluate your proposal is important, but since you have limited time, focus on the most pertinent information. Remember, your pitch can’t be all things to all people – it just needs to sell a clear idea in a short amount of time. Key questions that investors want answered are whether you’ve hired the right people, are targeting the right markets, have a viable product, and have a clearly defined business model. Quickly show your investors that your business is a sound investment, and they will ask follow-up questions, set up another meeting, and begin seriously evaluating your company for a potential investment.
Guest author Malcolm Hong is a writer and tech advocate with a passion for innovation. He’s connected to entrepreneurism and technology through his work managing the activities of the Idaho Technology Council, the state’s largest member-driven association that fosters the growth of Idaho’s tech ecosystem. Originally from Hawaii, Malcolm quickly realized that Idaho does a great job of growing startups, not just potatoes. Follow Malcolm on Twitter: @IDTechCouncil.