PITCHING TO INVESTORS

How to make a pitch to an investor

In 2012 my company received 400 business plans; we interviewed 40 and funded four. Where was the disconnect? After bringing this tidbit of information to my boss at the University of Virginia, (yes, I do have a boss) he asked me to develop a class that could correct this problem. (Always be careful what you complain about or you just might be asked to clean it up.) So I went on a journey of researching what the problem was. I studied the academics and also my peers and employees who were a part of the vetting process. We all got a kick out of how everyone wanted a million dollars but no one was willing to put skin in the game. Their reasoning was, “It’s my idea.” Although we all agreed, we would ask, “With that idea and a cup of coffee how far can you go?” This is what we found:

1.     Don’t send an investor a 500-page business plan – and expect someone to read it. You need to be introduced to or know somebody that knows somebody in the firm. As stated above, I received 400 of these plans in 2012.

2.     Know who you’re presenting to – Remember, you need to know who you will be presenting to. As an example, my students at UVa were in the finals of the E-Cup with a great high-tech idea. Their slide deck and presentation were perfect. I kept asking them, “Who will you be presenting to?” They never found out. They took second in the competition. When I interviewed the judges (the average age of whom was 65) and asked why they didn’t win, their comments were, “loved the presentation, but did not understand the concept.”

3.     Show up early to the meeting – Be ready to go – you will have about 20 minutes MAX. I guarantee you things will not go as planned, your power point won’t work, the projector will go on the fritz, or the investors will be late and now you have 15 minutes. The way to reduce your stress is to practice, practice, and practice.

4.     Use the 10/20/30 rule – The people you are presenting to are busy people. They will appreciate the streamlined presentation that means use only 10 slides, present no more than 20 minutes, and use a 30 font text in your power point slides, so the investors don’t have to struggle to see the information.

5.     Share the stage -Make sure your whole team is there and the CEO is not the only one answering questions. I will always invest in an A team with a B product, but NOT a B team with an A product. Make it very clear about who the team is and why they should trust with their money.

6.     Tell Stories. Stories are powerful and emotional, yet unappreciated in many business presentations. Most investors tell me they love a good story.  “The most memorable presentations don’t start with data,” They start with a compelling personal story.”

7.     Introduce a Villain and a Hero. Great stories and movies have a Villain who causes problems and a Hero who saves the day. In the context of a business presentation, think about Villains and Heroes as Problems and Solutions. What is the problem your idea solves?  Is it a nice to have product or service or a need by the customer? Make this very clear.

8.     Use pictures to tell the story. The first two slides of a presentation should have few words. Instead pictures are far more memorable than words. Studies have shown that people will remember 10% of information when the content is delivered verbally and 65% with pictures.

9.     Express your Passion. Investors want relationships with entrepreneurs who have a fire in the belly, investors weigh passion as one of the top three factors that influence their ultimate investment decision.

10. Business Model Canvas – Know your value proposition, customer segment, market size, and financials better than you know your wife/husband/children. I’ve seen too many pitches go sideways due to lack of preparation and information. This summer I will be putting all the information I’ve collected over the past three years on a Youtube channel for all to see. I have videoed over 100 pitches and listened to over 1000 questions from Angels, VCs, and Private Equity companies. There’s a pattern that I’ve learned and I am very excited about sharing that with all of you. The Video above is an example presentation I did for an actual investor.

Related: How To Land Your First Million Dollar Contract in Africa

SOURCEDouglas Muir
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Douglas Muir is an authority in business strategy, having successfully built several multimillion-dollar enterprises from the ground up. He is considered the start-up guru and speaks internationally on topics of entrepreneurship, innovation, and business growth. Muir teaches Entrepreneurship at the prestigious University of Virginia, both in the School of Engineering and in the Darden School of Business’s MBA program. As well as being a professor, he is the Assistant Director of the Business Minor Program in the School of Engineering. He is an expert in the Business Model Canvas theory of building businesses, and teaches this methodology to undergraduate students thirsty for entrepreneurship and eager to start their own companies. Muir has been interviewed by Gerri Willis of CNN and by Bloomberg Radio, and has been published and quoted in numerous publications including Business Week and The Scotsman Guide, a prestigious magazine for the banking, mortgage, and investor industry. Douglas was the host of The Doug and Eric Show on ABC, “Exposing the Hidden Truths about the Three Credit Bureaus and the Banking and Finance System”. He was featured in Kaihan Krippendorff's business tactics book, Hide a Dagger Behind a Smile, which described how Muir infiltrated the insurance industry and locked out his competition. If you’d like more information please feel free to contact me at dmuir@muirandassociates.net