Pitch for funding or impress the bank

Creating full 3-way forecasts for your start-up or existing business is now a risk-free and pain-free process. Combining these clear, well presented financials as part of your researched business plan we have also covered here. But how do you need to present to your prospective investors?

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Pitch for funding or impress the bank

It’s often hard, but crystalising your value proposition into a few short sentences is crucial in communicating why an investor should buy into your dream. As that is what you have to deliver, a dream, that can be made into reality with the injection of their cash. A dream that is going to give them a significant return on their investment.

As you prepare this, use clear, concise language. Avoid jargon at all costs, it will reduce your credibility. Ensure you address:

  1. What problem does your product solve or what situation does it improve? Tell a real customer story and imagine you’re explaining it to your mum!
  2. What are the specific benefits? Use stats, they are important.
  3. Why will people buy your product over your competitors? What traction have you had? What sets you apart from a business perspective? What sets you apart from a personal perspective?

Back-up answers that you need to have ready are:

  1. Customer acquisition: How are you going to reach your customers? How much will it cost? How will you measure your success?
  2. What is your revenue model and how will it scale?
  3. Who are your team and how will you grow it?
  4. Understand the numbers behind your numbers.

Make sure you know what your funding target is

Do not enter the dragon’s den without knowing exactly how much you need and in return for how much equity. This requires a realistic valuation. There are two main methods if you have a trading history – the discounted cash flow and net present value. If you don’t have a trading history, Crowdcube recommends that:

“For those with a limited trading history, the value of business is subjective and will fluctuate based on a number of variables (the idea, the market, the people etc.). If you are in this situation we recommend that you look at pitches that have successfully funded to find a comparison.

Remember that if you are planning on additional rounds of funding your initial valuation will be taken into account so be realistic or you could find yourself with an over-valued business that won’t be as attractive to later stage investors.”

How many investors are you going to pitch to?

Don’t put all of your eggs into one basket. If you are going down the angel or VC route, give yourself options with more than a handful of pitches. There aren’t an infinite amount of VCs, and the likelihood that the VCs or angels that you pitch to may know each other well is high.

You put your pitch at risk if you only pitch to two or three potential investors. There is a possibility that they may band together to facilitate their own needs over yours, removing any bargaining capabilities that you have.

Show your product

It seems like an obvious thing to say, but it is really important that potential investors get a real understanding and feel for your product. At FUTRLI, we understand the power of being able to visualise; to strip out the nonsense and focus on the important. Be bold and be amazing.

What is your exit strategy?

  • Are you planning on growing the business for the long term?
  • In which case, how does the investor become remunerated?
  • If you are planning on getting acquired, is there are precedence within your industry and who would buy your company?

Forethought into these matters shows a level of maturity with your potential investors.

“"We recently demoed the Xero/FUTRLI platform to a banker. His response - "if I could require every company in our loan portfolio to be on this platform, I would. Instead, I will just have to strongly suggest it." He is excited about the real-time analysis, and how it will allow him to proactively assist his client base, rather than reacting to months-old information. The alerting system in particular piqued his interest."” - Dan Schmidt

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