How to pitch to investors

Pitch presentation is a short and brief presentation (not more than 20 minutes ) to investors explaining about the prospects of the company and why they should invest into the startup business. So, pitch deck presentation is a brief presentation basically using PowerPoint to provide a quick overview of business plan and convincing the investors to put some money into the business.

Pitch presentation can be made either during face-to-face meetings or online meetings with potential investors, customers, partners and co-founders.

Here, some of the methods have been highlighted below as how to approach a pitch presentation :

Introduction :

To start with, you should give a brief account of yourself i.e. who are you ? What are you doing ?

Team :

The next step is to introduce to the audience the people who are working behind the scenes.

Problem :

Further, the promoter should be able to explain the problem he is going to solve.

Solution :

It is very important to describe in the pitch presentation as to how the company is planning to solve the problem.

Marketing/Sales :

The market size of the product must be communicated to the investors. This can include profiles of target customers, but one should be prepared to answer questions about how the promoter is planning to attract the customers.

Projections or milestones :

Financial projections include three basic documents that can make up a business’s financial statements • Profit and loss statement • Cash flow statement • Balance sheet

Competition :

Every business organization has competition even if the product or service offered is new and unique. It is necessary to highlight in the presentation as to how the products or services are different from their competitors.

Business model :

The term business model is a wide term denoting core aspects of a business including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices and operational processes and policies including culture. This is the most important part of a pitch, therefore, further explanation is given below :

A business model is the way in which a company generates revenue and makes a profit from company operations. Analysts use the term gross profit as a way to compare the efficiency and effectiveness of a firm’s business model. Gross profit is calculated by subtracting the cost of goods sold from revenues. A business model can be illustrated with the help of an example.

There are two companies : Company A and Company B. Both the companies are engaged in the business of renting movies. Prior to the advent of internet, both the companies rent movies physically. Both the companies made ₹ 5 crore as revenues. Cost of goods sold was ₹ 4 crore. So, the companies made ₹ 1 crore as gross profit.

After the introduction of internet, Company A started to offer movies online instead of renting or selling it physically. The change affected the business model of company A positively. Revenue is still ₹ 5 crore but the significant part is that cost of goods sold is now ₹ 2 crore only. This is because online sales lead to significant reduction of storage and distribution costs. So, the gross profit increases from 20% to 60%.

Therefore, Company A isn’t making more in sales but it figured out a way to revolutionize its business model, which greatly reduces costs. Managers at company A have an additional 40% more in margin to play with than managers at Company B. Managers at company B have little room for error and they have to tread carefully.

Hence, every investor wants to get his money back, so it’s important to tell them in a pitch presentation as to how they should plan on generating revenue. It is better to show the investors a list of the various revenue streams for a business model and the timeline for each of them.

Further, how to price the product and what does the competitor charge for the same or similar product shall also be highlighted. It is also beneficial to discuss the lifetime value of the customer and what should be the strategy to keep him glued to their product.

Financing :

If a startup business has raised money, it is preferable to talk about how much money has already been raised, who invested money into the business and what they did about it.

Conclusion

Therefore, the knowledge about how to pitch to investors is a must for an entrepreneur to get if he/she has to make a first hand impact on the investor. Efforts should be made to showcase all the above given points on “how to pitch to investors” in order to achieve your requisite goals.

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