One of the scariest challenges startups have to go through is finding their first investment and the thought of having to pitch an idea to investors might sound like an intimidating task. Luckily, we have come up with essential strategies that can help win over investors including creating a pitch deck, the importance of branding and building a prototype, understanding how to seek out and communicate with investors and a step by step guide for your live presentation.
Preparing for your Pitch Presentation
There are a few steps to go through before throwing yourself into doing a pitch presentation in front of investors. Creating a pitch deck, seeking and reaching out to investors, preparing a prototype, doing basic branding and building a website are all a part of the process. Here are a few elements to consider before your presentation:
Create a pitch deck:
A pitch deck is a captivating, interesting and concise visual presentation of your business idea defining the company purpose, problem, solution and going over the pain points for the customer. This is usually sent electronically in the form of PowerPoint to your investor prior to meeting with them. Pitch decks must include a brand mission statement which describes why your company exists, why investors should pay attention to you and what you want to accomplish and why. The mission statement is your vision and identity.
The pitch deck is there to show investors the investment opportunity of your app idea. Some of the other elements of a pitch deck include describing your product, target market, business model, identifying competitors and funding needs. We will get into these elements later on in the post as they are each explained in more detail during the in-person presentation with investors.
For examples on different pitch deck templates like from Airbnb, Uber and Facebook, check out this link.
Seek out investors:
Finding the right investors and establishing communication with them is an important step in launching your brand forward. Investors can be family, friends, angel investors, venture capitalists, crowdfunders and investment bankers. You can even build up your professional network with other entrepreneurs who have successfully received financing for their startup and get tips and advice on seeking out and communicating with investors.
You can use your present personal connections to your advantage and check if you have any mutual friends or colleagues on social networks that can help connect you to investors. In the case of having no prior relationship or communication with an investor you wish to contact, a cold email would be sent to them. In this situation, it is important to keep the messages short and concise and to send polite follow-up emails if you haven’t heard back from them in a few days.
It is important to learn everything you can about the investor prior to contacting and sending them a pitch deck. It is good to understand their business and expectations because not all investors work in the same way. In doing so, you can find the best possible approach to convince them to invest.
In terms of locating potential investors, creating an AngelList profile describing your company, team and products can help investors find you online and understand what you and your brand are all about. Through this site, you can also search for investors who have invested in other companies in your target industry.
Prepare a prototype:
In order to convince investors to provide funding for your app idea, they need to fully see and understand how your application works. Having a fully functional prototype will eliminate doubts and uncertainties about your app’s performance.
Creating a prototype proves you are serious about your app project and that you are willing to put in the time, effort and money. This shows investors that your idea is worth the investment. The prototype can be mockup screens, a wireframe of your app or it can be a simple storyboard. You can create interactive prototypes of your app using tools like Sketch App and Proto.io.
Create a website and domain:
Building a website and a domain is a simple way for investors to look you up and discover your app idea. Creating one can easily be done on content management systems like WordPress. Like with creating a prototype, having a website shows that your brand is professional and that you want to be taken seriously. It adds a layer of legitimacy to your business and increases the chances investors will respond to your idea.
It is important to sell your app idea to investors and prove your business is legitimate, and with a simple logo to present your brand, this shows investors that your project is marketable. At the early stage of pitching your idea to investors, the logo doesn’t have to be anything flashy, it can simply be the brand name and a basic icon.
Elements to Include in your App Pitch Presentation to Investors
After doing the proper preparations mentioned above and successfully grabbing the attention of investors, it is time to present in-person or on video chat an in-depth version of what was outlined in your pitch deck. This information serves as a guide to your live presentation. Remember to hook investors with an interesting fact, industry statistics or even a unique and short personal story. This is your chance to interact with investors face-to-face and talk about your team, so it’s important to show confidence and enthusiasm.
Don’t forget to practice your presentation and try to anticipate the possible questions they could ask and be ready with answers. It is always helpful to be well prepared. The goal is to prove that your app is worthy of funding and show why your idea is so different from the rest. The following are the in-depth pitch deck elements your presentation should include:
Explain the problem and solution:
Ask yourself, what problem are you trying to solve? For example, Uber solves the problem of getting around to different places and Facebook solves the problem of connecting with family and friends over the internet. Your app must solve a specific, simple and meaningful problem or else people won’t be interested in what you have to offer.
What value are you adding to the world with your app? How will you make people’s lives better and solve their needs? It is important to show the potential of how your app will respond to a problem and present why current solutions aren’t doing the job. It is a good idea to outline your unique value proposition and explain why your solution is so special compared to everyone else’s. Is it more user-friendly? Is it more efficient? Is it cheaper? Be clear on what separates it from other current solutions.
Evaluate your target market:
At this point in the presentation, you are explaining why today the market is ready for your solution. Go over market trends, size, shape and characteristics and prove that your target audience is ready for your solution, in fact, they are in desperate need of it.
Is your target large and constantly expanding? It is important to show the growth of your market in the past few years, the number of people you wish to reach with your marketing efforts and the number of people most likely to purchase your product.
Describe the product:
Give investors a clear overview of your product including its functionality, design, architecture and development. Explain its current stage of development (alpha, beta etc…) and when you plan on releasing it to the public. After describing your product, investors should not have any questions regarding the basic functionalities of your app.
The business model is when you explain how your app is going to make money and how your brand is going to survive and thrive over time. It is important to be specific about products and pricing and identify sources of revenue. Clarify the pricing strategy, the amount of planned profit, how you will steadily increase profits and the projected revenue growth over the next few years.
Giving an overview of your competitors shows your awareness that you aren’t the only one out there with the same idea. Proving that you understand the risk factors of other competitors shows your credibility to investors. Don’t claim to have zero competition because then investors will the think the market you want to get into is inefficient or does not exist.
So how are you going to break away from the competition? Explain why you have something they don’t and clarify the competitive advantages you bring to the table. You can explain which areas your competitors are lacking and how you’ll be making up for it.
One of the final steps in your presentation involves expressing the funding you are looking for and stating the amount you have already invested. Explain your projected earnings, how many funds you plan on raising and that you are also looking at other ways to raise money like through government grants and crowdfunding.
Be specific with what you expect from investors and what they will receive in return. Where will the money go and how will it be divided? How much will go toward development, marketing and infrastructure? It is good to be prepared with the estimated expenses and explain how the money will be entered in the app project and at which stages of development. It is important to show investors that everything has been calculated for them.
Concluding the presentation:
At the end of the presentation, move into the next steps such as exchanging business cards and setting up another meeting or a follow-up phone call. It is important to keep the momentum going with the investors and to leave the presentation with a way of contacting them or having a confirmed date for another meeting.
We hope these key elements will put you on the right track to success pitching your app idea to investors. If you are on your way to building a pitch deck and need assistance, we would love to lend a helping hand to build your scope. And, if you have experience pitching ideas to investors, let us know! We want to hear about your personal experiences and if you have any advice for future entrepreneurs.