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10 tips for giving a successful VC Pitch
For small businesses seeking to expand, meeting with venture capitalists can be a nerve-wracking but important step. VC's have the money and influence to help take a company or idea to the next stage of its development.
According to CNBC, 4,354 VC deals were signed in 2014 in the U.S., and a good portion of those took place in major business hubs like San Francisco and New York. For a majority of new or small businesses, VC funding might be either inappropriate or otherwise very difficult to secure.
For anyone considering a VC pitch, here are a few important things to keep in mind and steps to take.
1. Make sure VC funding is the right move
Only a very small percentage of businesses ever work with a VC, and as tempting as the money and status of such a partnership may be, Both Sides of the Table reported that bringing in a VC might be a mistake for some businesses. Either way, just getting a foot in the door can be difficult for anyone without personal connections.
Venture capital can be a blessing to many young companies, yet for others, a huge sum of money could actually cheapen foundational aspects of the business. Solid product development is important for any new business, and VC funding could make it difficult to stay focused on such a crucial part of the process. Likewise, according to Both Sides of Table, small businesses should focus on balancing a more modest budget before bringing in a VC's money.
Some businesses are destined to grow to the point where venture capital makes sense, however, and from there, preparation goes a long way toward making an investment pitch successful.
2. Practice, practice, practice
This may feel trivial, but even the most high-profile CEOs can overlook this step. Even if you built your business from the ground up, odds are your expertise and passion will wane at least to some degree under the pressure of a meeting with a potential VC investor.
Whomever you're meeting with has heard many pitches before, but VCs still won't have much sympathy for "um's" and "er's". Take the time to review talking points and numbers.
3. Be personable
Wealthy investors want to do more than turn a profit. VCs want to invest in companies they believe in and wish to see grow, and want to be able to trust prospective partners.
Introduce yourself and your mission to build a positive relationship early on. Venture Beat reported that bringing members of your team is also a good strategy as a way of showing that your business is balanced, unified and well-run.
4. Give a strong overview
CNBC reported that along with clearly explaining your vision and your business' mission, there are two key areas to highlight early on.
First, explain why your management team can be trusted. VCs want to succeed, make money and certainly don't want the embarrassment of a bad investment. Prove that your team is the best available for your company.
Secondly, address the market your business will serve right away. Let any potential investors know about competitors, available market research, applicable business trends and why there is such a positive outlook for your business.
5. Be concise
Venture Beat reported that keeping things simple is another important measure for a successful VC pitch. Not only do investors want to see that you are in control of your business, but they will also want important details about your company.
Your business will need to have a well-formulated growth plan, and being able to back that up with numbers and projections is important for earning an investor's trust. Specifics about costs and plans to secure further funding are crucial in this type of meeting, and for that reason, having a prepared overview of your business' finances and future outlook is critical.
It is also important to speak clearly and directly. Again, VCs want partners that can be trusted and that are focused on the goal at hand. A successful VC pitch will be loaded with metrics, but at the same time be clean-cut and accessible.
6. Stay calm
Along with speaking with conviction and precision, VCs will respond best to a presentation that is calm. CNBC stated that VCs may get distracted by a pitch that is frantic.
It is important to be proud and passionate about your business and the prospect of a VC partnership, but to bring in a big investment, you will need to prove that in any situation, a cooler head prevails. It's also good to keep in mind that one bad or awkward pitch doesn't mean the end of your business.
7. Excite the VC
As important as it is to be calm and clear in your presentation, you want to make sure that the VC is engaged and that your pitch is memorable.
It is ok to be humorous and show real personality. A VC pitch is about building a positive relationship, and for that reason, being stiff or unaccessible is ill-advised. Walk the line between being engaging and funny and serious and knowledgeable, as this will show that you have leadership skills and vision and will make a good partner.
8. Make a graceful conclusion
Ending your presentation on a high note is important, according to Venture Beat, but only do so once you have fully made your case and answered any questions. Be sure to address all concerns or feedback, especially because the responses or criticisms during these sorts of meetings can be very helpful.
To conclude, make sure to provide an effective summary of the key components of your business, reiterate how any venture capital would be utilized and extend gratitude for the opportunity to realize your company's goals and potential.
Following an initial pitch there are many more steps before VC funding is fully secured, but use these guidelines as a way of making your first meeting a successful one.
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