20 Tips for Pitching New Business Ideas to Potential Investors
To provide you with the best advice on pitching new business ideas to investors, we asked twenty CEOs, Founders, and other professionals for their top tips. From highlighting potential returns and problems to starting your pitch with the customer’s story, these leaders shared their insights on how to effectively present your business ideas to potential investors.
- Highlight Potential Returns and Problems
- Incorporate Storytelling and Realism
- Exhibit Confidence and Preparation
- Be Honest About Shortcomings
- Showcase Prototype or MVP
- Avoid Abstractions, Be Upfront
- Focus on One Main Idea
- Tailor Pitch to Investor and Time Frame
- Express Honesty and Cost Projections
- Craft a Compelling Story
- Present Information in a Structured Order
- Refine Pitch so Anyone Can Understand the Mission
- Make Pitch an Interactive Journey
- Demonstrate Solution in Action
- Align Pitch with Higher Purpose
- Focus on Emotional Connection
- Use High-End Digital Presentations
- Present a Problem and a Solution
- Understand and Discuss Key Financials
- Start with the Customer’s Story
Highlight Potential Returns and Problems
An investor will care most about the potential return on their investment when considering your project. You should highlight the potential future earnings while pitching your proposal.
Specify whom you want to reach, how much money is invested each year, how much room there is for expansion, and what you hope to accomplish. Your proposition will only be taken seriously by a customer or investor if they can foresee a positive return on their investment.
Remember, while focusing on profit, be transparent and realistic. So, include the problems you identified with the competitor, showing how your initiative can be the solution.
Incorporate Storytelling and Realism
My number-one tip would be to incorporate storytelling into your pitch. Investors see countless numbers and spreadsheets, but what really sparks interest and emotion is a compelling story.
Aside from the story, it’s also crucial to be realistic in your pitch. While it’s tempting to present the most optimistic projections, investors appreciate a clear understanding of potential risks and challenges.
An honest assessment of the market competition, or potential regulatory hurdles, for example, demonstrates a level-headed approach and a readiness to tackle the inevitable obstacles that come with launching a startup. At the same time, you don’t want to be overly pessimistic. Balance is key!
Exhibit Confidence and Preparation
Be confident! Most of the time, investors are putting their faith in personnel more than the idea or business itself.
Know your business, know your plans, know the numbers inside and out.
Be prepared when you are going in so that once you’re in those meetings, it’s all about building a relationship and selling your personality rather than thinking.
If you’ve prepared correctly, the numbers and pitch should be more or less on autopilot. The fun part and tricky part is getting them to like you. If they like you, they’re far more likely to invest.
Be Honest About Shortcomings
When you’re sitting in front of investors, pitching your ideas and needing them to invest in your venture, you need to be confident in what you’re saying, but also accept that you’re not perfect. You’ve likely made mistakes before, and trying to act like you know everything and that you’re the perfect entrepreneur won’t work.
Remember, these people also had to start somewhere, and they made mistakes along the way. It’s through these mistakes that we learn.
So, if you’re asked about mistakes, shortcomings, or perhaps weaknesses, be honest. That honesty will show bravery in this type of situation, which can really pay off when it comes to winning over the trust of those potential investors.
Showcase Prototype or MVP
Bring your A-game with a killer prototype or MVP (Minimum Viable Product). Investors get pitched ideas all day long, but if you show up with something tangible, something they can click through or see in action, it speaks volumes. It shows you’re not just all talk—you’re about action and results. It also gives them a taste of your commitment and the potential future of the product.
This isn’t just pitching; it’s showcasing your vision in the real world. Plus, it’s a great way to get immediate feedback and see that spark light up in their eyes when they realize what you’ve got is golden. That’s how you turn a maybe into a heck yes!
Avoid Abstractions, Be Upfront
Stay away from abstractions as much as you can. Find tangible numbers to pitch to investors so they can be confident in the potential reward they can reap from taking the risk. In addition, be upfront about the hurdles and downsides of your business plan. Don’t try to spin it. Say it plainly. Then, reiterate the upsides. There is no faster way to gain trust than to share an undesirable truth.
Focus on One Main Idea
When pitching a new business idea to potential investors, it’s crucial to focus on one main idea. This is similar to the approach Apple uses in their copywriting, where each headline focuses on a single idea and draws all attention and awareness to it.
The more ideas you try to sell, the more a consumer or investor doesn’t know what’s important. So, when you’re pitching, make sure to clearly articulate your main business idea and why it’s valuable. This will help investors understand your vision and see the potential in your business.
Tailor Pitch to Investor and Time Frame
As a partner in several ventures and an angel investor, I recommend that entrepreneurs choose the right pitch depending on the scenario, i.e., tailor your pitch according to the investor and the available time frame.
Use the elevator pitch to communicate your business idea in 60 seconds or less.
Use the short-form pitch when you have three to ten minutes to portray your value as efficiently as possible. This pitch allows you to summarize the most important elements of your idea in a way that makes them ask for more.
Use the long-form pitch when you’re fortunate enough to pitch your idea for over ten minutes. Tell your story, include case studies, and show data and clear examples of how you plan to acquire and retain customers. Finally, share your exit strategy and how much you need to raise to achieve this.
Express Honesty and Cost Projections
I raised my first venture-back round at 19 years old. One of my first investors told me, “This company will likely fail, but I want to be part of your journey.”
Most investors at early stages care more about investing in people they like than ideas they think will be an instant success. They understand that most businesses fail, but not all founders are failures. They want to understand if you’re someone capable of figuring it out through the ups and downs, that you’ve thought through what you’re doing, and you’re going to do what it takes to find the answers.
It’s not about being a know-it-all; it’s about knowing what you don’t know and understanding how you can figure it out. Whenever you pitch a new investor with a new business, it’s important to express honestly what you need to figure out, when you think you can figure it out, how much that will cost, and what you’ll have once you do.
Craft a Compelling Story
One tip when pitching new business ideas to potential investors is to tell a compelling story. Investors are not just investing in a business; they’re investing in you and your vision. Therefore, it’s important to craft a narrative that shows why your idea is not only unique and viable but also has the potential to disrupt the market.
Start with the problem that your product or service solves. Make it relatable and ensure it resonates with the investors. Then, introduce your solution and explain why it’s better than existing options. Highlight your team’s expertise, your strategy for growth, and how the investor fits into that picture.
Passion and conviction can be as persuasive as hard numbers. Show them why you believe in your idea and why they should too.
Present Information in a Structured Order
Investors are creatures of habit. They know what information they need and want to see in order to make an informed decision. They’re also used to seeing that information presented in a certain order that builds upon itself. A good slide order might be as follows: opening slide, problem, solution, product, market, competition, traction, team (with previous raise experience), financials, ask, closing slide.
Deliver the information they want, keep to a structure/format they’re used to seeing, and you’ll build rapport, relationship, connection, and confidence. You’ll get and keep their heads nodding throughout your pitch. Above all, make sure you have a problem that’s big enough and worth solving, and that you have a product-market fit.
Refine Pitch so Anyone Can Understand the Mission
Refine your pitch to the point where anyone can understand the mission and TAM. When I was pitching to investors in my previous startups, the initial pitch was always long-winded. Then, over time, my goal was to cut one to two words every week until I finally met the investor mindset criteria. For example, saying, “We make it easy to buy promotional products to engage your customers and brand,” is a lot easier to say than two paragraphs of every service that you can offer.
Make Pitch an Interactive Journey
Imagine yourself as an investor considering a business opportunity. The last thing you want is to feel like you’re being dictated to or stuck in a lecture. What you’re after is an educational experience where the product or device is showcased, allowing you to actively participate.
The key here is engagement. It’s about taking the time to demonstrate how the innovation can positively impact not only your life but also the lives of others. Rather than a one-way presentation, it’s an interactive journey, letting the investor see firsthand the meaningful differences the product can make.
Demonstrate Solution in Action
To captivate potential investors without promoting, it’s essential to exhibit your solution in action. This tangible display offers investors a comprehensive understanding of your concept’s functionality and its real-world benefits. Activating developer-mode output provides a transparent view of the technical intricacies, instilling confidence in your product’s robustness. This practical approach allows investors to readily adapt to your idea, fostering a deeper appreciation of its market value.
By showcasing your solution’s practical impact, you enable investors to evaluate its worth critically. The demonstrative evidence empowers them to make informed decisions, all while maintaining a direct, factual tone devoid of promotion or encouragement.
Align Pitch with Higher Purpose
Some investors don’t really care about the money or the impressive numbers you have prepared. They want to be sold on purpose. Take this chance to align your pitch with a higher purpose that reflects the values and missions envisioned at the genesis of your business.
You can tell a story about what motivated you to start doing what you are doing. This is the time to pull that “I’ve been to the mountaintop” magic by Martin Luther King, or draw from Obama’s “Yes, We Can.” The best entrepreneurs know how to captivate minds, inspire loyalty, and create a larger-than-life brand following through purpose alone.
This works. The best investors understand this one crucial fact: a business aligned with a higher purpose is easy to sell to customers. It makes it easy to earn customer loyalty and slash marketing costs. It makes it easy to earn a cult-like following that earns it top market share and top-of-mind awareness, even in tough environments with powerful competitors.
Focus on Emotional Connection
As a small-business owner of karaoke systems, one valuable tip for pitching new business ideas to potential investors is to focus on the unique experience and emotional connection your product or service creates. Investors are not just looking for financial returns; they want to invest in ideas that resonate with people and solve real problems.
When presenting your karaoke business idea, highlight how it brings joy, entertainment, and unforgettable moments to people’s lives. Share stories of customers who’ve had memorable experiences with your karaoke systems. Emphasize the market demand and growth potential in the entertainment industry. Show how your business stands out from competitors and the innovative features that make it a game-changer in the karaoke world.
Use High-End Digital Presentations
Ensure visuals accompany your presentation, and make the entire presentation accessible for later review, ideally on an X drive or digitally. Visuals should be high-end, digital presentations, not merely charts and graphs in PowerPoint. They should be exciting and emotionally compelling.
Providing access to the presentation later allows potential investors to review it again and contemplate it further. The more they can review it independently, the more likely they are to invest.
Present a Problem and a Solution
When pitching new business ideas to investors, you have to have a solution. Well, right after you present a problem, of course. The problem-solution dichotomy is a key point in any pitch. Why should they invest in your business idea? Because there are thousands of people or businesses out there that have a problem — and your idea provides a solution.
You can’t be vague about it, either. Give concrete examples that demonstrate how much you know about this problem and why it needs to be solved ASAP. And your idea? It’s not enough for it to be an okay-ish solution to the problem. It needs to nip it in the bud and give clients exactly what they need. This drives profits, and it’s what investors want to hear before they shower your startup with money.
Understand and Discuss Key Financials
Investors are ultimately interested in the return on their investment. Have a solid grasp of your financials and be ready to discuss your revenue model, pricing strategy, cost structure, and projections with confidence.
Know your key metrics like customer acquisition cost, lifetime value, burn rate, and break-even point. A clear understanding of your numbers demonstrates that you are serious and have a viable business model.
Start with the Customer’s Story
Don’t start with the big picture! Start with the story of the best target customer and explain how your innovation will enhance that person’s life.
If you invented aspirin, don’t say, “Fifty percent of the 9 billion people on earth get headaches, and we can fix that.” Say, “Imagine you’re a working mom, and you get frequent headaches so bad you can’t take care of your children, go to work, or function. What if two little pills could provide relief in 15 minutes so you can care for your kids, be productive at work, and feel human? Would you buy that? Over 4 billion people in the world get regular headaches.”
Humans process concrete, real emotional stories better than statistical abstractions. Tell a story.
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Glen Hellman, Executive Coach, University of Maryland – A. James Clark School of Engineering