Television programmes such as Dragons’ Den have done little to quash the fears of pitching novices, with the TV show delivering sweaty-palmed hopefuls into the investors’ lair each week. Pitching is the Marmite of the business world – some people thrive on the buzz, but many hate the thought of being in front of an audience. If you want to grow your business, though, pitching might be necessary to win the support you need.
Luckily for small business owners, going on TV isn’t the only way to deliver a memorable pitch. Here are a few ways SMEs can present a convincing pitch:
Keep it brief
Sir Richard Branson has seen and delivered his fair share of pitches. “You need to stand out from the crowd,” explained the entrepreneur at 30:30 Vision, a recent Virgin Media Business event in London for small businesses and social enterprises. “To do that you need to keep it really short, as short as possible. And do it with a smile if you are good at cracking jokes.”
He added: “The most important thing is to be concise. My own feeling is that a good idea can be written on the back of an envelope.”
Tim Mills, an investment director at Angel CoFund, which was established to support the development of the UK business angel market and provide investment for high potential SMEs, agrees that keeping pitches short and sweet is essential.
“There’s nothing quite so disheartening as seeing a 100-page business plan. A nice two page, very crisp, clear overview is a great way to introduce the business,” he says.
“When you are making that first pitch, all the rules of marketing and advertising apply. It’s about being able to get your message across clearly and having a call to action of some sort.”
Know your numbers
One thing Dragons’ Den makes clear is that if budding businesses don’t know their numbers, they will be in for a hard ride. Cheryl MacDonald, founder of YogaBellies, was awarded £50,000 on Dragons’ Den, and had her figures nailed down.
“The first thing for pitching is you have to know your numbers, you can’t go in and not know them,” she says. “We were very, very prepared. We knew the business inside out, we knew the figures inside out, we don’t have any business debt and it is a profitable business from day one.”
MacDonald advises pitchers to take in a copy of their key figures with them if they struggle to commit them to memory.
Investors will also want to be reassured that risks have been taken into account as far as possible. Mills says: “Fundamentally as an investor it is all about pricing the risk. Anything that can give you comfort that the risks are mitigated makes it more appealing.”
Team spirit
Investors aren’t just interested in great ideas – they also want to be confident that a business has the right team for the job. Mills typically encounters companies that are past the startup phase and on to their second or third round of funding. He says that at this stage the impression your team makes is hugely important.
“What you are really looking for in a pitch, initially, is to feel confident that there is an opportunity there, that you have a team that can execute against that opportunity,” he says.
“One of the challenges is that they start with the solution, which is obviously the most exciting bit, and they tend to be good at talking about the opportunity, but probably the area they are weakest is articulating why they as a team can execute against that opportunity.”
Finding the right partner
Although cashflow is traditionally the biggest concern for startups, pitching to investors should not be purely about pound signs. Ross Fobian, who recently raised £4m through venture capital for ResponseTap, a call-based marketing automation business, says: “One of the key things for us was finding the right partner. Getting investment isn’t just about the money. You get a lot more value when you get someone who believes and understands and has the right network behind them.”
Fobian adds: “Investors don’t necessarily invest in the business, especially first stage investors. They are actually investing in the founders, seeing what they have done, their drive, their passion. Obviously they have to have a company behind them that makes sense, but if they don’t like the founders they won’t invest.”
ResponseTap went through two rounds of venture capital funding, and Fobian says there is a marked difference between each stage.
“The main difference between the first and second round is the first is very much about the founders and our passion for the business,” he says. “With the second round we had a lot more numbers and rather than it being about us, although they still have to like the founders, it was very much a case of being focused on the numbers.”
For the first pitch, focus on your story as a founder and don’t focus so much on the business, says Fobian. “It is quite important that you have some concept of market size. If you are going for venture capital they are looking for big returns and for something that could be big.”
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