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Asking for money is hard. Raising millions of dollars to start a company is even harder. I’ve pitched over 100 investors and heard hundreds of pitches myself, some of which were successful and some not so much. No matter if you’re hoping to raise $100,000 or $10 million, I’ve found there’s a recipe for every successful fundraising pitch: 10% idea, 40% opportunity and 50% people.
You may think the most important part of your pitch will focus on the idea behind your company — the offering you’re pitching to investors. The idea is important, as it shows you’ve identified a service or product that fills a need or is innovating a current offering on the market. But you need to keep in mind that your idea may change. A great startup stays nimble, able to adapt and change a product or idea to changing market demands or challenges. For example, at my first company, we started with the idea of doing one specific type of genetic testing. As the market and technology evolved, we expanded our offering to another type of test entirely. Our investors’ expectation was that we would be able to quickly purse this new opportunity, even though it was nowhere in our original business plan. A successful pitch will show that you have a clear solution, but it is more important to show that you have a clear understanding of the problem your team is trying to solve.
The opportunity in front of your company should make up 40% of your pitch. Investors want to know that you clearly see an opportunity to deliver a service, disrupt an industry or create a product. Beyond your idea, it is all about explaining your thinking to potential investors — your pitch deck should tell the story of the opportunity you see, explain how you are thinking about solving the problem, how you will test and adjust and the traction you’ve gotten so far. At my current company, we started in the fertility space with a clear view of the much larger opportunity of all of women’s health. Our initial investor conversation focused on the $100 billion-plus women’s health market, not the $3 billion infertility market. Our storyline was, if we can do it in this market with our current solution, we will be able to expand and do more in the broader market. That is exactly how it has played out. Opportunity is about more than just the current market size, but a lot of pitches stop there. Take it further and think about how you will create a new market or expand market opportunity.
To a potential investor, the No. 1 question they’re asking themselves during a pitch is, “Do I think this group of people is the right team to tackle this opportunity and are they smart enough to come up with a good solution?” You should lead with your team and make it 50% of your pitch. Especially in the early stages of a company, your biggest asset is the people you’re bringing on to tackle the opportunity in front of you. A focus on the right people — be it advisors, co-founders or employees — will go a long way in terms of raising money and starting your business. Demonstrating that your team is credible, dedicated, intelligent and hardworking will resonate strongly with investors.
Creating a pitch that focuses 10% on the idea, 40% on the opportunity and 50% on the people can be challenging, but effective. This will also help you, as a founder, hone your story and understand your goals as a company. You also shouldn’t be afraid to walk away from investors who don’t have the same priorities as you, as these investors will become part of your team and be with you for the long haul and, most importantly, be part of your future pitches.
January 9, 2019 at 08:39AM
Forbes – Entrepreneurs