The following excerpt is from the staff of Entrepreneur Media’s book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes
Your pitch to investors is the single thing that could either get your business off the ground or plunge your idea into eternal oblivion. The rule of thumb for investors is that for every 100 investments they make, only 10 will go big.
Related: Landing Financing Without Taking on Debt or Giving Away Equity
Let’s take that rule a step further. For every 1,000 pitches an investor hears, they will fund only 100 of them. Statistically, the odds for success aren’t great. You can beat the statistics, however, by crafting a pitch that turns heads and gets funded.
What are the ingredients of an ultra-compelling, irresistible, outstanding and unforgettable pitch?
1. Take only 10 minutes
Timing is critical. The less time your pitch takes, the better. A brilliant idea means nothing unless you can distill it to a few moments of sheer power. The more concise you can be, the more effective you’ll be. Here are a few timing pointers:
- If you say you’ll take “only X minutes,” take at least one minute less.
- If you are told, “You only have X minutes to pitch,” take at least five minutes less.
- If you say, “One last thing,” make sure it’s truly the last thing.
- Move at a good pace. Don’t rush at the end.
- If you’re using slides, don’t stay on one slide for more than three minutes.
Here’s the great thing about taking 10 minutes: If the investors are really interested, they’ll ask questions. If they’re not, you’ll have saved them (and yourself) some time.
2. Turn your pitch into a story
Storytelling is a scientifically proven way to capture a listener’s attention and hold it. Besides, it makes your pitch unforgettable. Investors are bored with spreadsheets, valuations and numbers. If they want that information, they can get it. What you can offer that no term sheet can convey is the story and pathos behind your startup. Everyone loves a good story, even the most data-driven investor.
So tell your story and tell it right. You’re bound to gain attention, and the funding will follow.
3. Be laser-focused
Investors’ time is their most valuable asset. If you convey respect for their time, they’ll interpret that as your willingness to treat their funding with respect.
Because time is important, you need to develop an absolute focus on the core components of your pitch, detailed in the following tips.
4. Explain exactly what your product or service is
Show your potential investors a picture of or give them the actual product to handle. Be careful not to drone endlessly on about your product. Honestly, investors don’t care about your product as much as they care about the money your product will make. The sooner you get to the money, the better.
Related: The 7 Risks of 401(k) Business Financing
5. Explain exactly what is unique about your product or service
If you aren’t producing or providing anything different from the run-of-the-mill widget, don’t even go to the meeting. Go back to your drawing board, and design something better.
6. Explain exactly who your target audience is
Use demographic and psychographic features to pinpoint your customers. Show investors a picture of a customer along with relevant data points.
7. Explain exactly how you intend to acquire these customers
Business success comes down to marketing. If you have a marketing idea, method, technique or process, this is your chance to showcase it. Contrary to pithy maxims, great products don’t sell themselves. You sell the product. To be persuaded, investors have to see an airtight strategy for getting the product to market.
Most VCs are well aware of the advantages of digital marketing and won’t take a second glance at a product that isn’t backed by a tactical plan for online marketing.
8. Explain your revenue model
Investors invest because they want to make a return on that investment. An investor will care about your pitch if you can answer this question: How will my company make you rich?
The answer, in investor-speak, is your revenue model. Specifically identify which type of revenue model you’re embracing and how you intend to apply it.
9. Be wildly enthusiastic
Whatever you think of Shark Tank or investor Barbara Corcoran, you can’t argue with her insight into pitching a business idea: “My whole focus is on trying to size up the entrepreneur. I am looking at how much wild enthusiasm they genuinely have for their product. You can’t fake passion.”
A good technique for increasing your energy level is to add about 50 percent more energy than you feel comfortable with. You must crawl out of your comfort zone. Wild enthusiasm will not obscure your sophistication, insight, integrity and realism. It will only enhance it.
10. Dress to kill
People judge a person by the way they looks. That may be unfair, and you may resent it, but you’re not going to overcome this natural human tendency. The thousand bucks you spend on a new suit will pay for itself a thousand times over when you secure the funding you need. So don’t skimp.
11. Practice your pitch
And then practice it again. And again.
12. Anticipate questions and answer them ahead of time
If an investor is interested, they’ll ask more questions. Be ready for them. By formulating skillful and persuasive answers to the tough questions, you’ll demonstrate the panoply of abilities and traits that investors love to see.
Related: How to Finance a New Business by Rolling Over Your Retirement Funds
13. Show them the exit
Here’s the clincher on a killer pitch: an exit strategy. Starstruck entrepreneurs usually overlook this critical component when they’re pitching. They’re so sold on their sexy product that they cannot conceive there’ll ever be a need for an exit.
Every investor wants to make a lot of money in a short amount of time. What is a “short amount of time”? A five-year benchmark is a safe time frame. Your plan and pitch should explicitly answer the investor’s unstated question: How will this make me a lot of money in five years?
The answer is your exit strategy. Is it an IPO? An acquisition? Licensing? To answer “sales revenue or valuation” is to shipwreck your plan from the start. Investors want big payoffs, not marginal returns. They want to retire comfortably on a big yacht, not get their money back in a little equity package.
The goal of a successful pitch is to have investors begging to invest in your company. Sure, that sounds too good to be true, but it is possible. When you successfully deliver on what an investor wants, you’ll have a truly irresistible pitch.