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Introducing your startup to a venture capitalist (VC) can be daunting. You are talking to exceptionally smart and successful people in a competitive market. According to Statista, 2021 set a new record for venture capital investments in the United States with approximately $330 billion invested, almost twice as much as the previous year. You’re competing against a host of smart founders and amazing ideas. How can you best prepare for success?
Consider the VC perspective. With such a wide range of investment opportunities and pitches, VCs usually have a set of criteria they look for to help them evaluate an opportunity. Think about what you would like to know as a potential investor and build your pitch from there.
Even startups with fantastic ideas can test the waters before they even begin. Consider the following questions when preparing your next pitch.
Related: How to Sell Your Story Through Your Pitch Deck
What problem does your startup solve for consumers?
Investors want to invest in innovative products or services with long-term competitive potential. Successful presentations share solutions to real-world problems that have not yet been solved by other companies in the market.
Consider who absolutely needs to have or use your product. Do you offer something consumers can’t live without? What makes your product different and better than others? Are you giving people a compelling reason to change their current habits? If consumers are currently using a different product or service, why will they turn to your idea instead? Think critically about the answers to these questions and include them clearly in your pitch. Answer investors’ tough questions before they even ask them.
Why is now the best time?
Investors will likely want to know why now is the best time to invest in you, both from a market perspective and from your current stage of startup.
Investors will need to see that your target market is currently substantial enough to generate a significant return and be confident that you will be able to capture a substantial share of that market. Why will your idea work now and why didn’t it work before? Showing that your business will target an existing market opportunity is crucial to attracting the attention of venture capitalists.
When it comes to timing within your organization, VCs will need to know what growth and revenue milestones you will achieve and when you will achieve them. They will also want to see proof that the business is viable, with traction in your core market.
Be prepared to provide this information in a detailed and realistic time frame to investors.
Related: How a VC Wants to Launch
What makes you the best leader for your idea?
Your story just needs to feature prominently in any successful pitch. At this stage, VCs primarily invest in the people behind the idea. A strong and determined leader with a clear vision of his idea is imperative.
Include proof of your past success in your pitch. In addition to being proven, VCs want to see trust in your pitch. Prepare your pitch to showcase your best attributes, including your drive, passion, and presence.
Transparency is crucial throughout the pitch process, but especially now. It’s normal to be vulnerable. No entrepreneur is strong in all areas – it pays to be honest about your weaknesses and your strategic hiring plan to help close those gaps.
Additionally, demonstrate your ability to coach in your pitch. Be open to listening to VCs advising you and your business – they succeed for a reason.
Related: Everything You Need to Know About Pitching an Investor
Do you have the team to execute your vision?
In addition to you as the leader, VCs need to see the leadership team as a whole. Be ready to share that you not only have a unique idea, but also the right team behind you to make it happen.
Be prepared to talk about your team’s expertise and share a list of qualified and knowledgeable people who will play a key role in growing the business. If you don’t have this team yet, be prepared to share an in-depth hiring plan. Additionally, VCs want to see that your team is committed to the challenges ahead, with a shared vision for success.
It is also crucial to address the balance of your team. Do you have a marketing expert? Product guru? Head of sales ? Address any existing imbalances in the team’s expertise and be ready with a plan to close those gaps. Demonstrate that you are a smart and strategic founder in how you build your core team. Remember that VCs don’t just invest in your business, they also invest in people.
Ultimately, perhaps the best way to prepare for an introductory meeting is to put yourself in your potential investor’s shoes. Think about what you would like to know before investing in a business and answer these questions clearly in your presentation.