What venture capitalist investors want from a start-up pitch
If you’re a start-up owner and are looking for venture capital (VC) funding, where do you start? VC investors meet with thousands of start-ups, and deal with endless pitches. So, how do you ensure yours stands out?
Just 1% of all these pitches become real-life VC investments, which means the odds are stacked. But there are ways you can prepare your pitch to have the best possible chance of landing the crucial VC backing that could make your start-up the next Twitter, Facebook or WhatsApp.
What are venture capitalist investors looking for?
VC funding teams want to see unique business ideas. They want innovation, disruption and companies that could change the world. They also want to invest in a start-up that will guarantee them at least 10x their initial investment in less than seven years.
They don’t just look at proposals and plans, but also at the people who are delivering them. They must believe in your business, in your idea, and in your projections. They are seeking the whole package, so you need to prove you have the idea, the business plan to make it happen, passion, drive and realistically convincing financial projections.
How to find a VC investor
The best way to find a VC is to be referred through your network. Approaching people cold is a risky thing to do, as it can easily go wrong. Do plenty of research to find VCs that invest in your business area and double check the kinds of companies they’ve already invested in to ascertain whether you’ll be a good fit into their portfolio. Steer clear of VC investors that don’t deal in other businesses within your sector.
Funding ‘rounds are divided into Series A, B and C, each corresponding with different stages in a start-up’s journey. Series A funding is for start-ups that can scale up fast and can prove an interest in their product.
Series B and C focus on building the business, whether that’s overseas expansion, launching new services or scaling revenues. Start-ups are past early stages and are planning to expand. Series C funding is for companies that have proven their potential for long-term success and can show investors that their shares have increased in value.
Do venture capitalists only offer funding?
Many VC firms and funds offer far more than simply financial backing:
- Larger VC firms have in-house legal, recruitment, marketing and tech teams at the start-up’s disposal for help and support.
- Experienced investors come with large contact books and can introduce start-ups to all the right contacts.
- Help with strategy and direction is often part of the package.
- VCs have a much wider understanding of the market and can use this to give the start-up insight into everything from new clients to overseas markets.
While preparing to meet your chosen VC, you must focus on your business plan. VCs wade through thousands of business plans, and yours needs to stand out. Ideally, you should send your pitch deck through before the meeting, and the key points should be easily digestible at the top of the document. If you don’t grab their attention immediately, the chances that they will read all your careful financial projections diminish.
When you’re finally face-to-face, you should deliver the presentation by PowerPoint, which should include between ten and 12 slides only with the following information.
- The start-ups statement of purpose.
- Who the team members are.
- The problem your start-up will solve.
- How you will solve that problem.
- Why you, why now?
- How you will make money.
- A five-year revenue projection.
- The size of the potential market.
- Exactly how the investors will see their 10x return.
Be confident and relaxed during the presentation
Brush up on your presentation skills before the meeting, and always be succinct and clear with the information you are delivering. Don’t be over-confident but avoid any defensiveness. It will work far more in your favour if you openly discuss any weak points in your business plan.
VCs are interested in whether you can deliver what they want, and as such, are interested in your business plan and idea. Aim for a two-way discussion and remember that it’s not an interrogation. It’s acceptable to set a deadline for your VCs to express interest at the end of the meeting. You just need one VC to say yes, and if it’s not the first one, ask for feedback. Use this to refine your pitch for your next meeting. And don’t give up!
