If you’re an entrepreneur, chances are that at some point you’ll find yourself needing some money. Maybe you need to invest in equipment that will help you deliver more product to more customers, maybe you need to hire help, maybe things are just progressing slower than you projected and you’re running out of cash.
Pitching to investors isn’t easy, but there are a few things you can do to increase your chances of success. Seth Talbott, a serial entrepreneur and advisor of organizations that include AT&T, Microsoft, Vodafone, Citi, Wells Fargo, and Target, shared some advice in a recent Forbes article.
Consider Opportunity Size
You might be excited about your company because it’s a cool idea that connects with your passion, but investors are thinking about one primary thing: opportunity size. Not all good business ideas are high-growth, disruptive business ideas with a large potential market. VC investors are looking for a business with the real potential to make more than a few million.
Consider Customer Validation
How do you know there’s a large potential market for your business idea? You’ll need to demonstrate market research. Keep in mind that your goal is to convince the investors that there are myriad people out there waiting to purchase your product or service—and you’ll need to do this with statistics and facts. Having a couple of very large clients already signed on isn’t enough.
How will you scale the business? That’s going to be another thing at the top of every VC investor’s mind. How quick can you scale? What’s it going to cost? How complicated will the process be? If you see that it’s more complicated than it needs to be, simplify it. Think about how you can improve every aspect of the scaling process.
Talbot offers this counsel:
“Do everything that you can to better understand the investor’s side of the table so that you can position yourself in a way that addresses their concerns before they mention them. Spend time on YouTube learning from well-known investors and study other startup failure and success stories.”
Before you approach an investor, look at your pitch from his or her perspective. What matters to the investor? What does he or she want to see? What would motivate him or her to commit? If you go in with this mindset and a pitch that speaks to these concerns, you’ve dramatically increased your chances of success.