Got a startup idea? Here's how to pitch an idea to make it viable for investment.
Getting investment for your startup is the door you want to unlock, and the key to that door lies within your pitch. Many early-stage startup founders I talk to can tell me with passion about their idea, but most admit to having trouble articulating it in a compelling way in just a few sentences.
And that's ok; because it's much harder to write a short paragraph to capture the full essence of your idea, than it is to write pages of information explaining every inch of what's in your head.
Crafting short, succinct, and powerful articulations of an idea take time, and most don't come from just sitting down with a piece of paper and trying to write them. They come from immersing yourself in a strategic thinking process that enables you to fully explore and express the commercial viability of your idea.
Once you get to the point of needing investment, things start to get real; and so must you. It's no longer just a cool idea you once dreamed about alone at night; now it's an idea that you need to action; and for that, you need to create a pitch.
Pitch or Pitch Deck?
When I talk about creating a pitch, I'm not talking about a PowerPoint presentation. Sure, that's usually the format in which a pitch is ultimately presented to the world, but putting the slides together is the easy part. It's knowing what the slides will say that's the hard part.
To me, a pitch is much more than a presentation. It's the whole game. It's knowing your target customer and competitors better than they know themselves. It's understanding the size and opportunity of your market. It's exploring the most effective and scalable business model. It's running the numbers to put a commercial value and reality to what you're creating. It's checking your legal obligations. It's scoping your tech and finding your team and resources. It's all of this and more.
And once you've done all of that; it's being able to succinctly articulate the way in which you intend your idea to become the commercially viable venture you've imagined. It's inspiring investors to feel the vision you've been dreaming of and to bring them certainty that you are the one to bring it to life.
So, if you're ready to turn your early-stage idea into a commercially viable reality; here's a framework to get you started.
How to pitch an idea: 14 steps to creating an effective pitch
STEP 01: BE PREPARED
Set investment objectives and build a pitch plan so you know what you’re going after and who to target with your pitch. Write a draft 'elevator pitch' to stick on your fridge, then do some upfront thinking on the fundamentals of your business plan.
Tip: Follow a proven pitch framework. You can download one for free here.
STEP 02: GET TO KNOW YOUR CUSTOMER
Get to know your customer better than they know themselves! Undertake customer research and build personas of your best customers. Segment them into priority order - who's the lowest hanging fruit? Who's the biggest segment? Uncover the pain points that effect your customers and determine how your startup neutralises their pain. In other words, why will they buy from you?
STEP 03: ARTICULATE THE PROBLEM
Ideas are great, and they become even better when they’re the solution to a BIG problem, especially if no one else has tried to fix it yet. Identify and articulate the core problem you solve and craft it into one sentence that quantifies and qualifies it.
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STEP 04: DEFINE THE OPPORTUNITY
Investors will get excited about a qualified and quantified market opportunity that demonstrates growth and scale. If you’re not sure how to establish the market, ask yourself; who’s going to pay the bill? Which pot of money will your revenue come from? That’s the market you’re going after. Now find out how big it is and make sure you can demonstrate growth.
STEP 05: SELL THE SOLUTION
Separate what your solution provides (features) from why it’s important to your target customers (benefits). Think not what your solution provides, but what it does for them. Identify the core end benefits your customers will enjoy and consider how to present your tech or service on one page.
STEP 06: COMMERCIALISE IT!
With the opportunity, problem and solution clarified, it's time to make some money! Think about how to articulate your business model (how will customers buy from you?) and define your distribution channels (where will customers buy from you?).
STEP 07: BE A LEGAL EAGLE!
We all know legal ‘stuff’ can be a bit complicated (unless you’re a lawyer!), but managing risk is all part of being a startup founder. So, consider the legal aspects of your startup, such as patents, trademarks, licenses, contracts, insurances etc. Then decide what will be most important to investors and what you need to deal with now, versus further down the line.
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STEP 08: DEMONSTRATE TRACTION
This is the key aspect of a pitch that all investors want to see. Your idea is unique, your problem is qualified, your opportunity is big. Now you need to show investors that you can turn your idea into a viable business. The key here is being able to demonstrate proof of concept and customer interest (or even sales!). Show them the results you've got so far. If you haven't yet got paying customers or trial users, try to demonstrate intention to purchase, such as data from your customer research that shows an 'expression of interest'.
STEP 09: STANDOUT FROM THE CROWD
Get to know your competition and develop a market positioning that stands you out from the crowd. Your positioning is an alignment of what your customers want with what you can do well; and what your competitors can't provide, or don't provide well. Identify your advantages to show investors you bring a uniqueness that future-proofs your concept.
STEP 10: MAKE IT FAMOUS!
Acquiring and retaining customers is key to success. You’ll need to develop some marketing objectives, strategies and tactics and determine how best to acquire and retain your prospective customers.
STEP 11: DO THE MATHS!
What will it cost to set up and run your business and how much will you make over what time period? Important questions that must be answered before you embark on writing your pitch. Time to gather the numbers needed to get investors interested!
STEP 12: MAKE YOUR PITCH!
Every pitch should contain the actual pitch! What do you want from investors and what will they receive in return? In this step, you need to take a look at 4 components; the ask, the offer, exit strategy examples and the use of funds and corresponding burn rates. Don't go crazy trying to make up 'valuation' figures for your startup, especially at early stage. Investors will see straight through this because it's too early for anyone to be able to make those kinds of predictions. Yes, they are predictions, but finger-in-the-air-maths will not be well received!
STEP 13: TOP & TAIL IT!
Like any good story, a pitch has a beginning, a middle and an end. Just like an executive summary is developed last, the opening visual or words you give to your pitch (such as on a presentation cover slide) need to provide a compelling summary of what your audience will experience from hearing from you further. Always finish with a strong call to action.
STEP 14: READY, SET, PITCH!
Finally, once your pitch deck is done, it’s time to review your pitch, develop your script and then rehearse, rehearse, rehearse! Get ready to pitch to a room of investors and think about how you’ll create a memorable experience for them!
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