Author David Hugo Hargreaves Growth Guru at The Growth Hub: A family man and walker of the family dogs
If you wish to raise equity finance by pitching to investors this article is a must read. The Growth Hub has helped hundreds of businesses to raise the cash they need and all the successful ones followed our advice.
We always say; Know your Investor before your pitch….
Deborah Meaden, a serial investor says she’s “always looking for something new” and has a background in fashion and holiday companies, while Duncan Bannatyne is keen to know the numbers?
Know the people you’re pitching to, and think through which member of the panel is most likely to get excited about your idea.
Carefully design your pitch to appeal to your audience.
TIP: Always research and never assume that the investors know your industry (because they won’t!) .
Know your numbers inside out.
It seems obvious that you should be able to confidently talk through your turnover, costs and profit, and make projections about your sales during a business pitch. Yet in the heat of the moment many entrepreneurs melt under the pressure.
In any pitch, never underestimate the importance of knowing your numbers inside out. You might think you’ve got a good-enough grasp, however unless you are completely confident then the stress of being put on the spot could leave you struggling. You know the figures that you’re likely to be grilled on, so make sure they’re watertight and the working’s sound, and then go through them again and again until you could recite them in your sleep.
TIP: Projections 5 years – turnover – gross profit – net profit – know business terms i.e. mark up and know your CASH FLOW inside out
Be realistic and honest!
Founders who make ridiculous claims about how much their company is worth are likely to given a roasting by investors and they will. Make sure that you have realistically calculated your company’s worth and the investment you are seeking, and back it up with facts and figures.
Also, be honest about mistakes you have made as well as successes you have had. Successful business owners turned investors know that entrepreneurship comes with plenty of challenges, and your ability to surmount these are likely to help your case. It also helps show that you have felt the pain of failure.
Don’t ever say that you have not made mistakes because you will lose credibility.
Only make truthful claims about your business during the pitch, not least because due diligence will be carried out if anyone decides to invests in you.
TIP: There are various tools out there to do a valuation and we can help you. Please visit www.www.growthhubuk.co.uk
Sell yourself as well as your product.
Investors are looking for a great entrepreneur as well as a great business idea. The pitch isn’t just about selling your concept: it’s also about selling yourself.
Duncan Bannatyne says that he wants to be able to connect with the entrepreneurs he invests in, and cites Choc Box as his most satisfying investment, partly because he has a great working relationship with founder Peter Moule.
However great your idea is, unless you come across as competent, professional and likeable, you’re unlikely to gain the confidence of an investor.
TIP: Learning from your Failures – Investors like to see how you learn from your Failures.
Practice makes perfect
There’s no such thing as practising a pitch too much. Your mantra needs to be Practice, Practice, Practice. Practise your pitch down to the very last detail, including any props or product demonstrations, so that your less likely to fail.
Make sure that you rehearse the pitch in front of other people too, so that you can get used to having an audience, and also so that they can give you feedback. If your presentation is smooth and slick, then it’s more likely you will find your investor(s)
TIP: Ask a friend to video you using your phone. Don’t do more than 3 mins – you could even share the video on Utube for a response and feedback
Connect your idea to everyday Issues faced by your ideal client
They might be super rich business aficionados, but investors are also people dealing with everyday life like the rest of us.
With any pitch, you should be able to hook the audience by showing them how your idea or product could make their life better. Incorporate anecdotal or storytelling elements into your pitch to demonstrate how your business idea meets a genuine need.
Steve Smith secured investment on the Dragons Den TV program for his TrueCall device, partly because its ability to block spam phone calls. Steve therefore had a solution that dealt with a nuisance that everyone can relate to, including the investors
TIP: Think Issue – Think Solution – Think How – Research and test it on your ideal audience
Big up your successes so far….but don’t over gild the lilly.
Has your product received interest from a major retailer? Have you already sold hundreds of units, had thousands of visits to your website, or exported your idea abroad?
During series 11 of Dragons Den, Louise Ferguson’s marketing background helped her and co-founder Kate Cotton’s pitch to shine, as she kicked off with an impressive rundown of the success their Skinny Tan product had already had in Australia.
TIP: Evidence – proof of concept – MAJOR TIP – Sales – prove of – which is your traction
Remember that there’s life beyond the pitch and your first 100 Pitch Attempts.
It’s going to be hard to avoid sweaty palms and the odd stumble as you face the panel of investors Try to keep calm by remembering that the fate of your business does not rest on the verdict the investors deliver.
Keep in mind that many pitches go wrong many many times, only for the businesses to go on to massive success. Most famously, Rob Law’s ride-on children’s suitcase the Trunk became a runaway success and won a clutch of design awards, even though the sample product broke during Rob’s time in the Dragons Den TV show!
PERSONAL TIPS FROM www.www.growthhubuk.co.uk
THESE NEXT TWO are my Personal Tips from having Mentored many successes.
You must enter that room and own it and be confident in your service/product knowing that you have Researched and practiced by taking your product/ service to the market to test it on your ideal audience to see who would buy from you and not just your family.
Know what you want when you enter any Pitching event or meeting and what you are prepared to walk away with – it must be a win win situation so would 40% of your business for £500,000 be workable for you and the investors? Negotiation is key here and it is an art that is part of the Pitch. Know your numbers to be able to negotiate successfully.
2017 Sarah Willingham; a serial investor who is also a Dragon on Dragons Den
Ultimately Willingham believes you’ve got to be willing to take risks: “Nothing comes without some level of graft or a challenge”:
“When you go out funding for a start-up that’s when you need to tap into business angels and to much more riskier options than the traditional routes.”
Finding investment has a lot to do with surrounding yourself with the best people
Preparing for a pitch needs professional support and advice. The Growth Hub are on hand to support you, to train you and to give you the best possible chance of gaining the investment you need.
If pitching is not the optimum solution to raising funds, The Growth Hub has access to over 100 Crowd Funding platforms and we are able to assist in ensuring a successful raise. We also have an extensive panel of EIS funds who have considerable amounts to invest in great businesses. Overall The Growth Hub will help you raise the funds you need now and in the future. Not only that we have experts on tap to help you build your business. On this point; always remember that its not just about the money!!
Author David Hugo Hargreaves the Growth Guru at The Growth Hub.