It is no secret that a successful startup generally requires capital. Those seeking potential investors know that raising funds can be difficult and time-consuming.
Investor Statistics
Traditionally, those who present an idea to investors have about a 10% chance of success. This means that for every business idea that raised money, nine failed. Of course, it usually takes far more than ten presentations to get funded.
What is the formula for delivering a successful pitch to investors? Many critical factors determine success, most of which are centered on preparation. When pitching your ideas, you must carefully develop your strategy and complete the groundwork.
Identifying Potential Investors
What are your options to raise funds? You may consider friends, family, venture capitalists, and others. Consider inquiring among those within your professional and social networks. Create a list of those people or organizations that may be interested.
Venture Capitalists
A venture capitalist (VC) is a private investor who generally seeks to exchange capital for equity. VCs tend to favor investing in opportunities with a potentially huge return. Due to the risk involved, they may ask for a lot of equity in return for their capital.
VCs are a source of significant funds for startups and early-stage companies. VCs will likely want some degree of control and impact on the business’s operations. This input or control may cause conflict between the founder and the investor.
Angel Investors
An angel investor, also known as a “seed investor” or “angel funder,” is typically a private individual with significant financial resources. They are often found among friends or family and exchange capital for ownership equity in the business.
Angel investors may be a source of a single investment or provide continuous support in the early stages. Unlike banks, they may be willing to fund a business that is not yet profitable.
Making a Pitch
A busy investor may only give you a few minutes to hear your strategy. For this reason, you should have an “elevator pitch” prepared. This means you must summarize your product or service very efficiently. Be sure to show that you appreciate and understand that their time is valuable.
You may want to use some visual aids to outline or provide an overview. One strategy to consider is transforming your pitch into a story. Data has shown that listeners tend to become more engaged this way instead of only presenting spreadsheets filled with financial data.
When you have limited time, be prepared to present your key points clearly and succinctly. Always emphasize what makes your products or services unique. You should identify your target market, such as customer demographics, and thoroughly explain how your products or services create value for your customers.
Pitch Deck
The term “pitch deck” refers to a presentation compiled for an audience of a potential angel or venture capital investor. It is commonly created using PowerPoint or a similar program that contains roughly 15 to 20 slides. The content is generally not “wordy.” It is an overview that showcases your product, business plan, and business model.
Pitch Essentials
- Describe the product/service
- Clarify how your product or service creates value for the customer
- Explain how your business will generate revenue and profitability
- In today’s business environment, most investors will expect that you have a solid digital marketing plan
- It is essential to demonstrate enthusiasm, as well as a genuine passion for your business
- Your appearance should be sharp and professional
- Investors often find patents, trademarks, and other forms of intellectual property to be appealing
- Have a financial projection that outlines revenue and expenses
- Your financial projections should be realistic and have benchmarks
- It is important to demonstrate a solid understanding of your market and competitors
- Emphasis should be placed on the competitive advantages that you have
- Your pitch should contain the amount of capital you are seeking and the equity offered
Your Team and Leadership
In many cases, solo entrepreneurs may be less appealing to potential investors. Many investors are more attracted to those who have formed a team and shown leadership skills. You may also want to discuss your experience in this or a similar industry.
Handling Questions and Potential Objections
An interested investor is likely to pose questions. You should be well-prepared to address these questions, and your ability to respond confidently and naturally is essential.
A potential investor may identify possible weaknesses in your strategy or model. You should be prepared to address these concerns clearly and skillfully. If a potential investor objects, it should be considered an opportunity to demonstrate your knowledge and understanding.
Exit Strategy
It would be best if you were prepared to discuss an exit strategy. The investor may want to know the business’s potential value in five years. You may want to discuss options such as an IPO or acquisition proactively.
Follow Up
After making a pitch, you should consider maintaining contact. You may compose an email to follow up. This may briefly summarize some of the main points you discussed. Look for opportunities to stay in touch and further develop a relationship.
When You Need a Funding Boost
Many times, what prevents a SaaS company from reaching its full growth potential is the need for more funds to function at that initial negative profit while leads and sales are being created.
About RevTek Capital
RevTek Capital is an Industry-leading capital provider that provides strategic debt financing of $2MM to $20MM+ in tranches to innovative companies with predictable annual recurring revenue (ARR) of $5MM to $75MM. The funding is used for sales growth, acquisitions, and enhancing infrastructure for scaling operations. Each company’s debt structure is customized to its unique accomplishments and circumstances.
RevTek leverages years of lending and entrepreneurial experience. This allows them to provide customized credit solutions to growing companies with predictable recurring revenue nationwide. We aim to help entrepreneurs grow their businesses while maximizing enterprise value for owners, management teams, and shareholders. In addition, the professional team at RevTek has many years of experience in marketing and operations to assist their clients.
Key Benefit Summary
• Cost-effective capital for growing tech-enabled companies
• The company leadership retains control
• Repayment is structured into simple and manageable monthly payments
• Faster access to funding – closing in as little as four weeks
If you need capital to give your tech-enabled business the next boost it needs or need more advice on how to grow your business, please get in touch with us at RevTek Capital.
To learn more about RevTek Capital, please visit www.revtekcapital.com.
