If you’re providing B2B solutions, he says you should be prepared for your potential investors to spend hours with your targeted first customers. If you have a B2C solution, he says you should expect to have to show the cost of acquisition for each customer and how much they would then spend with you.
How? “By acquiring a similar URL to your own, setting up an acquisition campaign based on your value proposition using Facebook and Google, and then demonstrating your results,” he says.
5. Understand – and own up to – the risks
When Andrew Nowell, founder of dog activity monitoring system PitPat, was looking for investment, he realised it would be misguided to try and pretend there were no risks. Investors, he points out, are pretty sophisticated people.
“It would have been easy not to mention that there are other products like ours on the market,” he says. “Instead, we acknowledged this and embraced the fact that others believe in the value of the proposition and market opportunity.”
A market without competitors is not a true market, Nowell says; it’s your goal to focus on what makes your offering different from the rest of the pack.
6. Share your passion
As much as investors look at the product and market opportunity, Nowell believes that for many of them it’s fundamentally about putting their faith and money (£2m in PitPat’s case) into a founder and team who truly believe in what they’re doing.
“Investors need to see commitment and determination, but also a willingness to adapt and learn,” he says, pointing out that investors especially seem to like the fact that many of the PitPat team have put their own money into the business.
Holly Knower, CEO of the National Association of College and University Entrepreneurs (NACUE), suggests working on your storytelling skills. She explains that passion is most commonly displayed during a pitch through “the use of narratives to demonstrate feelings or expressions through first-hand experiences”.
“An entrepreneur must have a passion in order to drive them forward, as well as a firm belief that there is a need for their invention,” she says.
7. Work out how you can demonstrate success
It’s often not possible to bedazzle a would-be investor with revenue figures and stuffed order books in the early days of a business, but Knower says there’s something else that can show you’re moving in the right direction: traction.
“In most cases, ‘traction’ refers to customers or users that are going to interact with your product or service,” she says. “This is a useful metric to convince others to back your mission.”
Knower adds that all entrepreneurs should be spreading the word to numerous groups of potential buyers, and investors need to be shown the potential of these future customers. Give as much evidence as you can that they will go on to provide a favourable return. “An early starting point is to prove that you spoke to and interacted with a large proportion of potential customers before you even launched,” she says.