Here are 10 key questions to ask yourself before pitching investors.
1. What do your customers need and how do you know for sure?
It isn't enough to tell investors there's a need for your product; you need hard facts and real-world examples to prove it, says Danny Warshay, founder of DEW Ventures, a Providence, R.I.-based firm that provides startup coaching. Often, small-business owners skip what Warshay calls "bottom-up" research with customers. For example, Warshay worked with a pair of entrepreneurs who spent time in the prenatal vitamin section at Whole Foods, where they discovered women didn’t like the large size of vitamin pills and potential side effects of nausea and constipation. They used this bottom-up research when pitching investors on their product Premama, a prenatal vitamin drink that the company says doesn’t have digestive side effects. "When companies are pitching to me, I always look for" bottom-up research, says Warshay, who has helped start more than 15 companies.
2. What evidence can you provide of prior business success?
Often small-business owners focus on the wrong things when trying to show their track record, says Oren Klaff, founder of the Los Angeles-based website PitchAnything.com and author of Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal (McGraw Hill 2011). When discussing your background, don’t tout the names of companies you’ve worked for or schools you’ve attended. You need to pinpoint specific business achievements. What products have you developed? Which major clients did you attract to your previous employers? How much revenue did you bring in? Investors are always looking for measurable evidence.
3. Who’s on your team?
For many investors, a company's employees are as important as its product or service "That people part is often what gives the whole enterprise credibility," Warshay says. Focus on the experiences, networks and expertise your team offers. If you're a one-man-show or don't have the resources to hire anyone yet, show investors you have specific plans for attracting talent, Soorjoo says. Often, small-business owners will point out the roles that need to be filled without identifying specific candidates and estimating how much it might cost to hire them, he says.
4. How well do you know your competitors?