Prepare the Winning Pitch
When it comes to fundraising, many founders get an uncomfortable feeling. That’s because they are not sure how well they did their homework and what questions will be asked. The good thing about fundraising is that you can prepare well in advance and feel confident about your investor pitching.
The times when VC investors were chasing potential unicorns is already gone. Today, most of them are looking for sustainable businesses with proof that they can be profitable and scalable. Therefore, if you prepare and optimize your fundraising materials and address key issues, you’ll have a much greater chance to start negotiation and get funded.
It should be oriented toward the main goal: to get those miracle words, “I’d like to know more.” Start crafting your elevator pitch with your one-sentence positioning statement. Then add another sentence explaining what you’ve already achieved (provide proof of your business model). The third sentence should define what you are looking for in terms of investors. Here’s an example:
“We are building a platform that will become booking.com for medical services. Surveys of more than 500 patients indicated that it’s very frustrating to compare prices in different private clinics, find suitable times, and book an appointment without calling. We’ve already built a wireframe MVP, tested the concept and user experience, and even signed contracts with 120 clinics to earn affiliate commissions on their sales through the platform. Now we seek $100,000 to build and launch the platform in the local market.”
It should be nearly a work of art that represents your business idea, brand, tone, and even your personality. It will be your most-often-used piece of fundraising material because you’ll have to reach as many potential investors as possible at the beginning in order to find the best partner for your startup. The one-pager should:
• contain all the critical facts about your company but still remain minimalistic
• be of high quality, by all means; therefore, you might consider hiring a freelance designer to make your one-pager visually outstanding
• prepared in a mobile-device-friendly format, convenient to send and read via mobile
Investor Presentation and the Pitch Deck
Introducing your business idea verbally (pitching) will require a simplified presentation with fewer details compared to the pitch deck, which you will hand to potential investors. There are different recommendations as to what aspects should be included in your investor presentation, but these seven points should be at least covered:
1. Problem: Remind investors about the main problem your product is designed to solve, and explain why a solution is so important and urgent.
2. Solution: Show the product or at least use screenshots, sketches, prototypes, or photos.
3. Customer workflow (with and without your proposed solution): This is optional, but if your solution is innovative, the simplified workflow will help investors better understand the essence of your business specifics. Customer workflow shows step by step what a customer must do to satisfy their need.
4. Market overview: The total addressable and target market size, key players, competitors, possible partners, your competitive advantage, and differentiation.
5. Financials: Share your financial situation and plans for the future (including key milestones we talked in Lesson #8). Investors want to be sure that you will use their funds effectively.
6. Achievements: Provide the evidence about your progress, including an overview of what you’ve already done and how it’s made your startup stronger.
7. Team members: Introduce your key players, and prove why you and your team can make this happen.
The main purpose of the pitch deck is to cover all important aspects of your startup business in such a way that potential investors can review it in less than five minutes. Actually, as Kim-Mai Cutler shared in his 2015 article on TechCrunch, investors spend only 3:44 minutes on average reviewing each startup’s pitch deck. Therefore, your pitch deck should not be designed to close the investment deal, but to get investors interested and move you to the next stage to discuss additional aspects and possible partnerships.
Investors rarely have time to read long business plans, so the first impression becomes more and more important. But it’s not enough just to have a great elevator pitch. You should also have to prepare a one-pager, a presentation for the pitch, and a pitch deck.
Now that you know how to prepare your fundraising material, it’s time to find out how to reach out to potential investors, which is our topic for the final lesson.
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