A great idea costs nothing, but turning it into a successful business is not cheap. Whether they need US $ 5,000 or US $ 500,000 to build their businesses, entrepreneurs often need to present their idea to potential investors to get financing. But this process can be very challenging.
As founders of Beskope Post (a subscription service for men’s lifestyle), Rishi Prabhu and Steve Szaronos raised $ 800,000 in five months. Each month, subscribers receive a box with products ranging from essentials to shaving to wine accessories. Investors in the company include such fat names as the STAR Angel Network, made up primarily of investors who are professional athletes, including former NFL linebacker Keith Bulluck who witnessed pitching meetings.
“What appealed to me most was the clean presentation,” Bulluck said. “When people come in and get to the point it’s because they know what they’re talking about.”
It is also important that entrepreneurs demonstrate charisma and flexibility, he said, because no one wants to work with a difficult partner, no matter how good their business model. “When you are starting a business you need to be humble, because reality will never resemble your initial vision,” Bulluck said. “You might have to work to adjust that vision.”
But everyone agrees that before considering pitching, entrepreneurs need to do more work than simply write a concept. “When Bespoke introduced their project before us they were in an excellent position,” says Erica Minnihan, director of STAR Angel Network, who has appeared on the CNBC Prime programming. “They had a good business model.”
Build a solid business, and then look for investor money
Before seeking funding, Prabhu and Szaronos operated Bespoke (with very little budget) for six months, doing virtually everything, including packing the boxes.
“The process at the beginning was not about investing but about building a business and understanding an opportunity in the market,” Prabhu said. “The money comes later.”
Thus, once they gained a solid customer base they felt ready to test the viability of the business. “Traction is important because anyone can have an idea,” says Prabhu. “But run it … this is what really demonstrates that the idea will work.”
10 Secrets to Making a Successful Pitch
Beyond the number one advice: build a business and then seek money from investors, Bulluck, Minnihan and Prabhu claim that entrepreneurs must understand every aspect of their business and be prepared to receive criticism. In addition, they deliver these 10 keys to make a winning pitch:
- It perfectly understands the market in which your business will be inserted.
- Have a defined (and verifiable) strategy for getting new customers, and an estimate of how much it will cost to do so.
- Have an excellent idea to retain customers.
- Articulate why you need investor money.
- Present a solid plan on how you will use the money.
- It brings together a reliable and trained team, and defines the roles of each.
- Have a solid, business-specific approach. Remember that less is more.
- Lead the meeting as if it were a conversation.
- Attitude matters: Be charismatic at the same time as showing a strong work ethic.
- Demonstrates flexibility and openness to change. Building a startup is a fluid and dynamic process.