15 Effective Ways To Prepare To Pitch To VC Investors

FORBES > MONEY
Expert Panel®
Forbes Councils Member
Forbes Finance Council Post

Feb 22, 2023,08:15am EST

Raising capital is a critical challenge for entrepreneurs, and in today’s competitive market, securing funding can be more difficult than ever. With Crunchbase reporting that global venture capital funding hit a two-year low in August 2022, entrepreneurs must be prepared to go the extra mile to stand out and secure the investment dollars they need to grow their businesses.

Having a full understanding of what investors are looking for and how to best sell your vision has never been more important. Below, 15 Forbes Finance Council members offer their best advice for improving your odds of landing an investment deal. Follow their practical tips and strategies to help drive investor interest and secure the funding you need.

1. Bootstrap To Start Earning Revenue

If possible, use bootstrapped funds (personal, partners, family and friends) to come up with a minimum viable product (MVP) and start earning some revenue. I think the days of good terms on no revenues are likely behind us or far off in the future. Showing some revenue—especially multiyear agreements, if applicable—will go a long way with today’s fundamentally minded investors. – Justin Sanderson, Sanderson Wealth Management

2. Know Your Business’ Solution And Value

Flashy pitch decks are great, but in a tight funding market, entrepreneurs need to focus on two key components of their business: solution and value. What market need does your business solve, and what value does it bring to the marketplace? Investors are looking for businesses that have a clear value proposition and a strong potential for growth and profitability. – Glenn Hopper, Sandline Global

3. Highlight What Makes Your Business Unique

Differentiate yourself with your technology, expertise and/or product. Gone are the days when copycat companies would get funded (for now, at least). Bring something truly unique to the table, and be reasonable about spending assumptions. Investors are wary of unprofitable companies. They would prefer to back companies on a path to self-sufficiency. – Rebecca Mitchem, Neotribe Ventures

4. Consider Your Long-Term Vision And Exit Strategy

Carefully consider the longer-term vision of what you’re looking to accomplish with the business and its impact on your target market. Carefully consider, too, one of the most important things VC investors seek: making profits during liquidity events. When founders present a compelling exit strategy during their pitch, they increase their chances of securing investment capital. – Thomas H. Ruggie, Destiny Family Office

5. Develop Your Survival Strategy

Tightening economic conditions have made fundraising extremely competitive for startups. Founders who want to improve their odds of raising capital should be able to clearly explain their strategy for surviving the next few years. This includes not only runway, capital efficiency and a focus on margins, but also their competitive edge and differentiation from their peers. – Nish Patel, Inertia Ventures

6. Create A Compelling Business Plan

One tip entrepreneurs can use to better improve their odds of landing investment dollars is to focus on creating a compelling business plan. This should include a detailed description of the product or service, an overview of the target market, competitor analysis and a clear financial forecasting model. This will distinguish your business from other investments and show investors its value. – Angelo Ciaramello, The Funded Trader

7. Be Ready To Execute Your Business Plan

Make sure to have your pitch deck completed, the team established, and projections and proforma done. You must be able to show the ability to execute your business plan. Investors are looking for sectors with large growth potential and innovation. Showing that you have proprietary technology and patents helps. Most investors want to see that business owners have put their own skin in the game. – Joseph Lustberg, Upwise Capital

8. Establish Clear Objectives And Your Value Proposition

Establishing clear objectives and a cogent value proposition will never fail you. Entrepreneurs often build valuable products but fail to communicate the benefits or longer-term goals properly to investors. Highlight the value of your product versus other products, and always ask yourself what the necessary goals for growth are. A compelling value proposition with realistic objectives is key to success. – Anthony Georgiades, Pastel Network

9. Build An MVP To Gain Early Traction

Start with a technical team that can get an MVP developed at as low a cost as possible. In any economy, VCs will always invest in a product with early traction and strong customer feedback and data. – Jaclyn Foroughi, Brazen Impact

10. Map A Fast Track To Profitability

With the economy and interest rates where they are, your chance of getting investment is directly correlated to how well you can show a quick path to profitability. While in certain cases “growth at any cost” can still get funded, it’s no longer a slam dunk. Put your best foot forward by showing you can be a good steward of the investor’s capital and get to profitability quickly. – Aaron Spool, Eventus Advisory Group, LLC

11. Measure And Track Everything

Investors want to see accurate, compelling statistics. Beyond working on your marketing and sales strategies to drive growth, it’s imperative to keep track of everything so that you can present a convincing opportunity to investors when it comes time to raise capital. – Jared Weitz, United Capital Source Inc.

12. Have Your Documents Updated, Organized And Ready

Organization is the key to success. Having all documentation needed for funding opportunities ready at a minute’s notice will ensure that you are always prepared to take the first steps to secure capital. An up-to-date roadmap will also provide an honest representation of where your company currently is and where you want to go, painting a clear picture of how you can provide a return on investment. – Xan Myburgh, Backd Business Funding

13. Prove Demand For Your Product

Make sure you can prove product-market fit or that you have a plan to achieve it when you enter a room with a VC. Ensure there’s demand for your idea and that people are willing to pay for it. Investors will require evidence that you have built a product that fulfills a need, satisfies demand and sustains profits as well as—or better than—your competitors. – David Whyte, Irwin

14. Consider The Investor’s Point Of View

Have everything buttoned up before you approach capital providers, whether you’re approaching banks, non-bank lenders or equity partners. This includes a cohesive, well-articulated vision for the business in its current state and its future direction, as well as the hard data and logic to back it up. Put yourself in their shoes: If you were the lender or investor, what would you want before providing funding? – Andrew Kerai, Capital Ideas Inc.

15. Ensure Your Concept Is Scalable

Each investor has their own way of looking at an investment. You need to figure out if your concept is scalable. If it isn’t, then no amount of marketing or networking will help you raise funds. You will simply have to find other ways to make money with your idea. Understanding your idea’s scalability will help you craft an investor pitch. Investors want to make money, period. Plan for scaling. – David Abreu, Pacific United Financial Group