An idea begins to brew, it takes shape, grows and develops, until one day it’s ready to be presented to the world. Every entrepreneur knows that there are several phases in the life of a startup/scaleup, all of which are challenging and important. But there is one in particular that fills us with dread and, at the same time, feverish excitement: the investor pitch. At Nutrium, we have been through this phase several times and it is, without doubt, both an intense and very rewarding experience.
There are two key ingredients a business needs if it wants to accelerate growth and succeed in a particular market: human and financial resources. As Reid Hoffman says in the Blitzscaling course, ideally, you should be 100% certain that a company achieves three milestones: a killer product, a clear and sizeable market, and a robust distribution channel. However, in general the best course of action is to be aggressive instead of waiting for the stars to align, and take a chance, as long as you have the capital and talent to do so.
To ensure they have the financial resources they need, many entrepreneurs work hard to present their vision to investors. In this article, we are going to share some of the tips that have helped Nutrium close three rounds of investment.
- Make sure you are focusing your energy on the right investors. No matter how desperate you are for investment, there is one mistake you must not make: don’t settle for an investor who is not the right fit for your startup. Ask yourself these questions: Is the investor able to invest? Is the investor really interested in the startup? Does the investor add the value you need, whether money, mentorship or contacts in specific regions? Make sure you know what the investor brings to the table to ensure that it fits with your startup’s needs and goals.
- Preferably, tailor your speech to the audience. The more personalised your pitch, the more likely it is that you’ll receive a positive response. Did you reach out to an investor because your needs/vision align with their investment approach? Make sure that this alignment is perceived on the other end after the pitch. In Nutrium’s case, we always included a slide in our deck that clearly showed why we believed we were a perfect fit.
- If possible, make an effort to create a good deck for your pitch. The deck, besides helping to share the message during the pitch, is in fact the first example, for investors, of what an entrepreneur and their team are capable of. Put in the same time and effort as you would for other important processes in your company. Prepare decks for every occasion (3, 5 and 15 minute pitches) and don’t forget to also prepare backup Q&A slides.
- Focus on what really matters. During a pitch, you get a unique opportunity to captivate an investor’s attention, so make every second count. Don’t go into detail and make sure you leave investors wanting more. If you can pique their interest, you’ll get the opportunity to explain everything in greater detail later. There are three key things that must be included in a good pitch. The first is to share your vision, mission and enthusiasm. Investors must get a clear picture of what drives you and your team. The second is to address any concerns an investor may have, making it clear exactly what problem it is you are solving, that there is a market for your solution, and that the team is capable and efficient, among other concerns. Finally, it is crucial that you demonstrate why yours is the right company to back – once investors understand the problem and your vision, make sure they also understand why they should invest in you and not some other competing business.
- Make your mission clear. One of the messages you must get across to investors is your startup’s mission. What problem are you addressing? How far do you want to go? At Nutrium, we always start our pitch by making our mission clear: we share what drives us right from the start and share some of our enthusiasm with investors.
- Clearly identify the problem and the opportunity. For a business to be successful, it must address a market need and offer a solution to meet it. During your pitch, it’s important to clearly identify the problem in question and show exactly how your solution solves it. It’s also important to focus on the opportunity the solution represents. Factors such as timing, market receptivity and external conditions will have a significant impact on your success, so they must be aligned to ensure investors see your solution as worthwhile. Take Nutrium, for example: we are focusing on nutrition at a time when digital is transforming healthcare (accelerated by the COVID-19 pandemic) and in a market where nutritionists welcome solutions with open arms because their calendar isn’t full. The problem exists, and so does the opportunity.
- Present your solution and vision. After identifying the problem, the next step is to present the solution. Present it clearly and concisely, showing exactly how you are going to solve the problem. More than focusing on the features of the solution and going into detail, you should show how it’s going to improve the market. As for your vision, it’s important to share your outlook with investors and the long-term impact of your solution. At Nutrium we always show investors that our platform addresses the major pain points of the nutrition industry: the lack of personalised follow-up between nutrition appointments, how difficult it is for a nutritionist to start a business, and how difficult it is for the average person to find a reputable and quality nutritionist.
- Identify your market and competition. Some entrepreneurs believe that secret is the soul of business, but in this case being secretive can actually hurt you. It is important to know who your competitors are and you mustn’t be afraid to talk about them, because if you don’t, investors may see that as a negative: it means you haven’t done your homework or lack transparency. This is also when you should reflect on market-related issues, such as market size.Generally, the bigger the market, the bigger the potential for your solution, since more people will identify with the problem and want a solution. To determine the actual size of the market, you need to understand the various aspects of the concepts referred to as TAM, SAM and SOM. In a nutshell, TAM (Total Available Market or Total Addressable Market) is the total market demand for a product or service. SAM (Serviceable Available Market or Serviceable Addressable Market) is the segment of the TAM within your geographical reach. SOM (Serviceable Obtainable Market) is the portion of the SAM you can capture, or are realistically able to target. Only after carrying out this analysis will you be able to reach the share of the market attainable by your solution. If your target market will change over time, let investors know.
- Explain your approach well. You’ve shared your vision, the solution and goals of your startup. But what about your strategy for fulfilling that vision and capturing the market? This is one of the most important parts of a pitch for investors, and one of the things we focus on more when we present Nutrium. In a business model as evolved as ours, it is essential that we present a breakdown of our vision in different steps and which of them were successful.
- Focus on your team. No matter whether or not you have a lot of experience, the team is always a core component that must be spoken about and focused on. Investors invest in ideas and business models, but they also invest in the people behind them. Talking about the team’s strengths is a way to boost your business’s credibility and it’s something you can always do, irrespective of what experience the team members have. If your team has a lot of experience, you can focus on what each member has achieved in their career; if it doesn’t, focus on what they’ve achieved in the company. This is also where you can show the company’s ability to attract key talent, even without financial resources.
- Discuss the current stage of your business. Here is where you explain at which stage of growth your business is in, the most recent successes and challenges, and present the metrics to back up what you’re saying. Choose the right KPIs for your business (the most important metrics of a SaaS are not the same as those for a marketplace or eCommerce, for example), and make sure you master the metrics of your business so that you can present them confidently. Also make sure you present all the metrics investors expect to see, even if they aren’t the best. Don’t forget: transparency is key in a pitch and in investor relations.
- Be certain of the next steps. It is very important that you show investors how the business is currently doing, but it’s just as important to talk about the short and medium-term outlook. Present a plan for the next 18-24 months and a snapshot of the company at the end of that period so that investors get a picture of where you’re headed, the milestones and the final outcome. Be clear about what you’re look for. Do you want to validate your business model? Develop a product? Scale to new markets? Grow the team? There has to be total transparency about how things actually stand and the key aspect to be developed.
- Make your funding needs clear. The pitch needs to be as clear as possible, and the part concerning funding needs can leave no room for doubt. Know exactly how much you need, what you need it for and when so investors know how much money they’ll need to invest. This is a unique opportunity to talk about your needs. Investors should come away with a clear understanding that the investment you’re seeking is enough to reach your next major objective (which, in most cases, is a new investment round).
- Build a good rapport with investors. The pitch is a key moment for your company, but more importantly it’s an opportunity to build a long-term relationship with investors. Make sure you send a follow-up email after the pitch and make it a habit to send regular updates to investors to show the progress of your company and assess it with them. Creating a monthly or quarterly newsletter just for investors is also a good idea to help build a closer relationship. Participating in investment events and seeking out investors can also be important in establishing a personal relationship and trust with them.
- Use any and all feedback to improve your pitch. Whatever the outcome, ask for feedback about your pitch. Whether you get the funding, or are rejected, a pitch is always an opportunity for reflection and to identify areas for improvement. Ask investors what they think needs improving and, if possible, have someone from your team in the room to analyse the pitch and identify weaknesses. They can help identify any negative aspects, areas in which you seem less confident, or even slides that elicited a less enthusiastic response from investors.
Although no two businesses are alike, the market has agreed on what’s expected from a pitch and that’s why we follow these 15 tips in all our pitches. So, don’t try to reinvent the wheel. Instead of trying to change what works, focus on perfecting the contents of your pitch.
You’ll never know how good your pitch is until you present it to an investor, so relax and treat each pitch as an opportunity to learn and improve. Experience has its advantages and you’ll get better with each pitch. The trick really is to continue practising, improving and making your pitch until it’s perfect. When you think it’s perfect, don’t become complacent: there’s always (always!) room for improvement.