Perfect Pitch: What to Say When Seeking Startup Financing

by Sean Ross

2 min read

Anyone seeking a capital investment to get their startup up and running will inevitably have to make a pitch to investors. While there are many different ways to construct a successful pitch presentation, it’s smart to be aware of some of the most important and necessary elements.

State the Problem Clearly

Perhaps the most important part of a pitch is to clearly and concisely describe the problem in the marketplace that you have identified and intend to solve. Discuss things such as why the problem exists, how the problem got there, and any and all market niches involved. The description of the problem must be very well thought-out. Nebulous conversation will do no good and most likely hurt your chances of getting funding. Be crisp, clear, and quantify as much as possible.

Describe Your Solution

The next step is to convey to potential investors exactly what your business will do (or hopefully is already doing) to solve the problem you just described. Exactly how your business will solve or is already solving the problem is extremely important to discuss. It’s also important to be extremely transparent. Don’t hold back secrets, and even don’t ask a venture capitalist or angel investor sign a non-disclosure agreement (NDA). As a matter of fact, asking them to sign one will tell them you are new at this. Serious investors see dozens or hundreds of deals a week and tend to never sign NDAs.

Address the Marketplace and Competition

It is critical to do your research to uncover how many people in the marketplace are affected by the problem you have identified. Gather as much data and demographic information as possible to show that there is a viable business opportunity. A solution to a problem only affecting 1,000 people will not get funded. Likewise, it is not wise to generalize too much. For example, saying “North America has X number of people and if your business can sell to just 0.05% of them, it will be a multi-million dollar idea” is also laughable to venture capitalists. Take the time to find real, accurate numbers.

Next, it is important to review the competitive marketplace. Discuss what types of businesses are already providing similar solutions (if any) and what businesses will be direct competition.

Present a Viable Business Model

Lastly, you need to present a viable business model that shows how the solution will be monetized and brought to market. Things to pitch at this point of the presentation are:

  • Exactly how the product will make money
  • How the product will be brought to market
  • Sales strategies
  • Financial projections for a few years

Always remember that investors needs to see your idea as a business. If the descriptions to these bullet points are not satisfactory, the idea will not get funded.

Lastly, in this section, it is a good idea to describe exactly what you will use the investment funds for.

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