What potential investors are looking for

Pitching to potential investors can be stressful - especially if it’s your first time.

 

Pitching to potential investors can be stressful - especially if it’s your first time. That is why it is important to prepare well, have support documents and presentations on hand, and know which questions to expect. You know your business best, make sure you convey your plans and goals clearly and effectively, so potential investors are as excited about your venture as you are.

This is what investors look for in your funding pitch:

1. The problem you are solving. It is important that you highlight the problem you are solving in your industry. Tell potential investors the story of how you identified the problem and why you believe you can solve it. Convey the nature of the market opportunity you are addressing with your business and outline the size of the market opportunity. 
2. Your market. It is important that you know exactly who you are targeting with your product or service. Imagine what your ideal customer looks like, what their needs are and how you plan to service those needs. Don’t think everyone in the world is a potential client, as this is very rarely the case. 
3. Momentum and traction. In your funding pitch, it is important to build credibility. Use this opportunity to share your accomplishments to date (sales, contracts, hires, launches, etc.).
4. Your product or service, business model and business plan. Outline your product or service specifically and highlight how you plan to make money. Make sure potential investors understand your business model and business plan. Give potential investors a solid idea of your plan, so they know where you’re going as well as you do. 
5. Marketing strategy and sales plans. Demonstrate to your potential investors that you have thought about how to role out your product or service to capture maximum market share. It is also important to calculate how much it will cost to reach your customers. 
6. Your team. Present your team and outline why they are the best people to lead your company. Highlight your team’s strengths and emphasise their commitment to building a successful business. Also let your potential investors know which people and skill-sets you will need to hire in future and what it will cost.
7. Financials and projections. It is important that you show investors what they can expect in terms of revenue, both in the short term and over the long term. Back up your figures with solid research and let your potential investors know how you reached your conclusions. Make sure the figures you present are accurate, realistic and achievable. 
8. Sustainable competitive advantage. It is very important to indicate to your potential investors how your business is unique and different from others in the market. List your competition and analyse their strengths and weaknesses and how you plan to set yourself apart. It is crucial that your competitive advantage is sustainable over the long term. 
9. Specific investment request, and equity offered. Be open about how much money has already been invested in your company and by whom. Outline how much you will need to reach the next level and be clear about what that level is. Tell potential investors how much you need, why you need it, what you will use it for and the intended outcome. Also highlight the advantages for them to invest in your business. 
10. Exit strategy. Most potential investors will want to know what you exit strategy is and why it would make sense some years down the line. 

Here are some key questions you can expect from potential investors:

1. What is unique about your company and what problem does it solve?
2. How many actual sales have you made?
3. Why is this the right time for this product or service?
4. What feedback have you received regarding your product or service so far?
5. What is your current growth rate and your projected growth rate?
6. What barriers to entry or scale are there for you?
7. What will your market look like in five years as a result of using your product or service?
8. What mistakes have you made thus far in this business and what have you learned?
9. What is your PR and marketing strategy?
10. What experience do you have in this industry?
11. What key roles may need to be hired for soon?
12. What are your strengths and advantages over your competitors? What are your weaknesses? 
13. How long will it take to become profitable?
14. What new features are you working on?
15. What is the next milestone this investment will take you to?