Whether you’re a fan of Shark Tank or someone who loves to brainstorm business concepts, you’ve likely pondered how to deliver a persuasive sales pitch to potential investors. Getting venture capitalists and angel investors to back your new startup is different from how a store sales rep encourages a potential customer to buy a product. There’s more money at stake, and the people hearing your pitch know how to vet business ideas.
However, a common thread binds retail salespeople and entrepreneurs on the hunt for funding: the crucial need to comprehend their audience and communicate the value of their offering. So, let’s dive into how to pitch your ideas and secure funding for your business.
Table of contents
What is a pitch?
A pitch, or a sales pitch, is a proposal to a prospective customer or investor. When entrepreneurs pitch a business idea, they’re asking the person across the table from them to join in their venture. This might mean asking the person to take an active role in the new business. More often, it means asking the person to invest money in the business, helping it to scale up, attract customers, and turn a profit.
How to pitch ideas
- Know your audience
- Research your target customers
- Focus on the “how”
- Use a visual pitch deck
- Structure your pitch
- Add a human element
- Anticipate and address objections
- Put the ball in the investor’s court
- Practice in low-stakes environments
When preparing your pitch, a little advice from an expert can go a long way. Kelly Lyons is the founder of Lyonshare, a consulting firm that specializes in polishing investor pitches. Kelly has spent her career as an investor and entrepreneur who’s helped raise more than $10 billion in equity across Wall Street, Fortune 500 companies, investment funds, and startups.
"You have to know the party you’re pitching to and what gives them motivation."
Kelly’s number one rule for a successful pitch: know your audience. “You have to know the party you’re pitching to and what gives them motivation,” she explains. You must offer a unique value proposition that appeals to the person across the table from you, whether that’s a seasoned venture capital executive or a generous relative who’s intrigued by your startup idea.
To make a positive impression on a prospective investor, show that you have a well-defined business model, that you know your target market, and that you’re the right person to bring this business idea to life. Here are the essential elements of a perfect pitch:
Know your audience
“When you’re doing any type of pitching,” Kelly says, “you need to understand the profile of the person you’re trying to pitch to and what would motivate them to buy in and say yes to you. If it’s a typical investor, they’re motivated by a financial return. If it’s an impact investor, they’re trying to do good in the world and also make a financial return. If it’s a family office [which invests on behalf of a wealthy family], they might have some political views.”
Kelly drives home the point that who you’re pitching to is every bit as important as your actual business. If the match isn’t there, there’s little point in pitching.
Also important: “You should not waste your time pitching to an investor who is not actively investing,” Kelly says. You might think you have the perfect target for your business idea pitch, but if they’re not looking to spend, you’ll have nothing to show for your efforts.
Research your target customers
“Reach out to your prospective clients before you pitch, Lyons says. “You can beta test a product with them, or if that’s not possible, you should interview them and find out if it’s really something that they’d want to buy. If there’s any way to prove that there are potential customers willing to pay, you can take that to an investor and say, ‘Hey, someone is willing to pay for this.’” That’s the prime motivating factor for any investor, Kelly says. “They’re asking: ‘Can you prove that there is someone that really wants this?’”
Focus on the “how”
Novice entrepreneurs often overvalue their ideas, not understanding investors care much more about how you’d bring those ideas to life with a viable business plan. Does it help to have a good elevator pitch that summarizes your brilliant idea in a few sentences? Yes, but the truth is that investors need more than a riveting elevator ride to commit money to a startup.
“People mistakenly think they need to get everyone in the room to sign an NDA [nondisclosure agreement] before they even start talking,” Kelly says. “But an idea is nothing. It’s all about execution.”
Demonstrate how you’re going to operate your new business or improve an existing business. Successful pitchers come with proof points about their startup’s market size, a coherent management structure, and a roster of team members who will help turn a good idea into a thriving business. This can help prospective investors ask questions as part of their due diligence.
Use a visual pitch deck
A pitch deck is a visual slideshow that lays out your key points in a pithy, compelling manner. Also known as a slide deck, it lets you grab your prospect’s attention with images, while at the same time talking them through your substantive plans. Each slide should feature data points and compelling images that make your product pitch feel substantive and well-researched.
“The investor deck is the business plan,” Kelly says. It needs to contain everything you’d include in a formal document, but it should focus more on headline summaries and visual representations of data—particularly financial data. Kelly recommends starting with an introduction, a summary of the problem, your solution, the size of the market, and traction, limiting your pitch deck to about 20 slides.
Structure your pitch
Kelly advises crafting an investor pitch that lasts roughly 10 to 15 minutes. That gives you time to present the hard data you need to include, while holding your audience’s attention during the entire pitch.
“The most compelling pieces of the pitch should be in the first 25% of the pitch deck, because that’s the stage where you can lose someone,” she says. In that first quarter of the pitch, tell them about the market, customer pain points and existing solutions to each pain point. Then show how your startup will offer a better solution.
As you push into the middle 50% of your pitch, you’ll want to include information on how you’ll stack up against the competition. “Definitely include a market size slide and a competition slide,” Kelly says. This competitive analysis demonstrates that you understand the marketplace and know how to penetrate it.
The last 25% of the pitch is the check-the-box information that someone would need to know before choosing to invest—the amount of money you’re raising and how you’re spending it. Create slides that showcase your financial projections,” Kelly says. Finally, conclude by reconnecting on a personal level. A great pitch always resonates with the person receiving it.
Add a human element
One way to effectively pitch a business idea is to put your own personal touch on the concept. You can strengthen a generic pitch with a compelling story or personal anecdote—ideally one that shows you understand your customer and offers a clear value prop, and will thus stand out from the competition. You can also talk about your own career growth, or you can present a value statement that connects your business concept to you the person.
Think of your pitch as your verbal business card—a way to show an investor that not only do you have a great business idea, but also that you’re the right person to execute it. Don’t tell the whole story of your life, but add enough personal detail that your audience will find you synonymous with the business you’re pitching.
Anticipate and address objections
Part of your pitch, Kelly says, requires recognizing your listener’s biases. “When prepping, think about why someone would not choose to invest,” she advises. “Then think of what mitigants can counteract that. In the pitch, put in information that would argue the opposite is true.”
For instance, some investors are skeptical of founder-run businesses, preferring to back companies led by a more dispassionate outsider with a strong business track record. If that’s the type of person you’re pitching to, make sure you include why it’s a good thing that you, the founder, will run the business. Name the elements you bring to the project an outsider could not, such as a personal understanding of the marketplace.
Put the ball in the investor’s court
“Ask questions at the end of the pitch,” Kelly says. “Once you’re done presenting, ask, ‘What questions do you have? Is there any more information I can get you as a follow-up?’ Or ask, ‘How does your investment process usually work, and what’s your normal timeline?’” You’ll get a clear sense of how serious they might be and what else might be required in the sales process before they’ll commit to investing.
Practice in low-stakes environments
“Your first few pitches are your worst,” Kelly says. “You get smarter along the way as you collect feedback from the other side of the table.” This means you shouldn’t start your pitch process with your best prospects. Start with lower stakes meetings and build up from there.
“Before you pitch to your top targets, try to set up coffees or lunches where you can practice pitching and get honest feedback about the state of the pitch,” Kelly says. “Ask your listener: ‘What do you like? What could be improved? What needs to be in the pitch that isn’t already there?’”
You can also use these meetings to brush up your presentation skills, giving you a competitive advantage over other entrepreneurs seeking funding. If you have a prototype of a product, test it out in these low-stakes settings first, along with any interactive elements.
Pitch ideas FAQ
How do you start a pitch?
Start your pitch to investors by introducing your product and explaining how it addresses an existing need in the marketplace.
What are good pitch ideas?
Good sales pitch ideas are ones that showcase a defined customer base and a strong plan for establishing, operating, and scaling the business. You want your prospective investors to know that you understand your market and have the right tools and team members to succeed.
What is a pitch example?
An example of a business pitch is selling an investor on a sustainable, subscription-based meal kit delivery service that emphasizes locally sourced ingredients and convenient cooking options. You could highlight its potential to tap into the growing demand for eco-conscious dining and the size of the potential market, while offering a scalable business model with widening profit margins.
How do you write a strong pitch?
To write a strong pitch, consider utilizing the PAS framework, which stands for “problem, agitation, solution.” Begin by clearly identifying the problem your product or service solves, then agitate by highlighting the pain points and challenges associated with the problem. Finally, present your solution, emphasizing its unique benefits and how it effectively addresses the identified issues.