If there’s one thing startup founders and investors have in common, it’s that both are extremely short on time. These days, everyone has a great idea. Making yours stand out comes down to your pitch. If you want to attract the attention of investors, keep it short and let your idea do the talking.
Treat your pitch to investors like a consumer advertisement. When marketing to potential customers, you’re trying to show them the value that your product adds to their life. Investors are no different. If you want someone to financially back your idea and commit their own time and resources, you need to prove to them that they’ll get something out of it in the end.
When it comes to speaking with investors, more is absolutely not merrier. I can’t reiterate it enough–keeping your pitch tight is absolutely vital. The businesses that really stand out can typically make their idea sound compelling in just one sentence. Below is a short template to create a captivating pitch with all of the necessary details to convince investors to believe in your idea.
1. Your Problem
Most of the time the problem you’re trying to solve is actually more important than your solution. If you don’t start out with a relevant problem, it’s impossible to create a meaningful solution. Clearly identifying your problem is a great starting place when talking to investors. In doing this, you provide the much-needed context for them to truly understand the magnitude of your idea.
Don’t be afraid to tell your personal story. As a founder, you’re likely the one with the most experience dealing with the problem you’re solving. Don’t discredit yourself as a user. Tell investors how you stumbled upon the problem and why it deserves a solution.
2. Why It Matters
There is a huge difference between finding a big problem to solve and being able to explain why it’s a big problem. The scale of the problem doesn’t automatically result in a successful startup.
If you want investors to believe in your solution, you need to first convince them that the problem you’re solving actually matters. Surveys, user feedback, and industry trends are a great way to demonstrate that the problem you’ve identified is important to people.
3. Your Solution
Your idea is the focal point of your business, but it shouldn’t require the most time to explain. In fact, the actual explanation of your solution should be the shortest part of your pitch.
The way you talk about your product is extremely important to investors at all stages. Having the ability to clearly articulate your vision is important in every aspect of business and is a trait that all investors look for. Don’t oversell your solution with words, but instead allow them to come up with a conclusion on their own.
If your startup idea requires eight sentences to explain, that’s a good sign that your solution might be a little too complicated. A one sentence explanation is ideal, but every situation is different and you need to use your own discretion. The main point is, keep your explanation short and intentional.
Remember, actions speak far louder than words. Instead of talking investors through your product, showing them a prototype will almost always make it easier to demonstrate the true value in your idea.
4. Why It Works
All products change drastically over their lifetime. For a startup, the “why” is generally a lot more important than the “how”. When seeking funding, telling people how your idea works won’t be enough to convince them that your business will be successful. If you want to get investors to trust you, you need to explain why your solution works.
Cars work because everyone needs to get from Point A to Point B at some point during their day. Despite decades of changing designs and aerodynamics research, the “why” behind cards has remained the same. Cars were born out of a need to increase travel efficiency, and most manufacturers today are continuing this trend.
The point is, investors recognize that the best products work for a very clear reason. Demonstrating that you know why your idea works gives investors confidence that you are aware of your users and the impact your product has on them.
5. Your Target Audience
It’s fairly difficult to sell a product to someone that isn’t interested. Discussing your target audience is the first step to proving the validity of your idea. Identifying your target audience can be done through a combination of creating in-depth customer profiles, measuring engagement on ads, and simply getting your product in the hands of different people.
While customer profiles and user stories can be abstract, your target audience should be clearly identifiable and concrete. This is the one place during your pitch where it will never hurt to be too specific. Age, gender, and location are important, but what matters most is that you know your customer on a deeper level. Investors want to see that you know your users’ interests, daily habits, consumption patterns, and just about everything else about them that pertains to your idea.
6. Your Validation
Regardless of how good your idea sounds in person or on paper, no investors will put capital into your business unless they know they’re going to get a return. The end of your pitch is a great place to highlight your successes and demonstrate that your business is getting real world traction.
Finding the right metrics to measure largely comes down to what type of investment you’re seeking. Depending on the idea, validation comes in all shapes and sizes. Overall, you want to highlight stats that demonstrate your startup’s ability to grow effectively and generate positive revenue.
Keep It Short and Sweet
The most important thing to keep in mind when speaking to investors is to keep it simple. Don’t overcomplicate your pitch with unnecessary stats to make yourself sound better–it’s easy to see right through that. Your pitch and all of the data you include should be centered around two things: identifying a meaningful problem and proving that your solution works.