Attracting capital is never easy. Venture capitalists, angel investors and others who provide capital for entrepreneurial enterprises are constantly pitched for funding. In today’s market, the average VC fund will review between 80-100 deals for each one they choose to fund.
However, in order to stand out to investors, entrepreneurs must know how to formulate a compelling pitch. A successful pitch should include several key elements:
- The first, and perhaps most important, part of the pitch is to identify the problem or the pain that the market is experiencing, or the idea or opportunity for which the technology is disruptive. This is probably the single biggest element of the value proposition—the compelling market need that isn’t being met.
- The next aspect of the pitch should encompass the solution to that problem. In the case of technology companies, that can include unique intellectual property. For others, the “secret sauce” might not necessarily include IP, but rather the solution to the identified problem.
- Entrepreneurs should also describe their business model, which includes how the company will make money, how business is transacted and who the paying customers are or will be. This requires an understanding of the market and market viability. While many good ideas are floating around, whether a market exists for those ideas is another matter. This issue needs to be addressed in the pitch.
- The pitch should also include a discussion of the competitive landscape, with an emphasis on competitors. This is actually a positive area to discuss, since the presence of competitors indicates there is a viable market.
- Some information should be devoted to the team, since anyone providing outside funding isn’t just investing in the company—they are investing in the people behind it.
- Pitches should address financial projections, which will implicitly include the use of funds.
- The pitch should also capture the current state of the company, whether that ranges from one wild idea to a product that customers are already adopting.
Ultimately, a good pitch will encompass three aspects—the pitch deck, the business plan and the executive summary—and the elements and ideas highlighted above should be woven throughout. By understanding what makes or breaks a pitch, companies can increase their chances of raising the capital that will allow them to take a great idea and turn it into a viable business.