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To attract #investors to a business is a challenge that entrepreneurs must meet in their pitches. The author highlights 8 motivation elements that investors expect to hear from the entrepreneurs’ pitches.
by Martin Zwilling
When pitching to investors, entrepreneurs always seem to start with a customer pitch, then add a slide or two about the business. In reality, they need a separate pitch about the business, carrying over only a slide or two about the solution. Remember, investors are buying into the business, not the product. Investors are business experts, while the entrepreneur is more likely the product expert.
In every case, the relevant pitch needs to start by highlighting a real customer problem, then outlining a new solution, with all the features and disruptive technology. One of the most common red flags I hear from my fellow investors, and even customers, is that they hear yet another “solution looking for a problem.” These don’t get funded, nor bought by customers.
Beyond that common starting point, the why and how of the business are more important to investors than the what. Attracting business investors is as tough as attracting customers, but it’s a different challenge. Investors have business motives, so using customer motivations to attract investors won’t work.
Here are the motivation elements that investors expect to hear:
1. Size and growth potential of the market opportunity
Your customers don’t care if you are targeting a billion-dollar market and growing at double-digit rates, but investors will skip small or shrinking opportunities. Large and growing markets imply a high #startup growth potential, with high odds of scaling and success.
2. How the solution and business model work to fund the business
Every customer understands that your solution has to generate more revenue than cost, but you should not put that data in a customer pitch. Investors will impatiently expect a winning business model, customer segment definitions and volume projections.
3. Competitor positioning and sustainable competitive advantage
How you intend to beat specific competitors (business model, intellectual property) is a key investor decision criteria. Your solution may be a technological marvel, but if it is vulnerable to competitors, potential investors will likely walk away. “First to market” is not sustainable by a startup.
4. Startup team strengths and domain experience
Customers may be attracted to your marketing message, but investors look harder at the startup team, seeking superior expertise in the key areas of growing a business, product domain, #financial, marketing and sales. In my experience, the team’s credentials are more important than the product.
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