Pitch to Win: How to Get Funding (or Approval) to Build Your Great Idea
Pitching investors requires more than a great idea. Whether you want seed funding for your startup or budget allocation inside a large corporation, you’ll need to go beyond the technology. Each scenario has unique risks and rewards, but solid preparation will put you on the winning track.
Where to Begin?
First, understand what you’re getting into. Seed and Series A funding thresholds are not what they were a decade or two ago. If you want to fund a startup, you not only need a great idea, but also a proven track record of revenue—at least enough to sustain the founders.
Inside a large corporation there are no hard-and-fast rules to what your CEO will find attractive. In my experience at mature $1 billion organizations, nothing less than a $50 million top-line revenue opportunity would raise an eyebrow at the executive level. Inside any established company a reasonable (although, full disclosure, unsubstantiated) rule of thumb would be anything that could bring in an additional 5 percent top-line revenue growth within three years.
That said, the appetite for funding changes over time and vertical to vertical. So, do some research into your specific area of opportunity and determine exactly what you’ll need to achieve before gaining the interest of investors or your execs. The best way to find out? Ask the people who hold the money.
Tip #1: Research the funding thresholds you’re dealing with – know if your idea is big enough to get investors interested.
Tell Your Story
Once you know what it will take to get their interest, get them excited about the opportunity. Even executives and investors born in the tech world or working in a specific vertical don’t know everything about everything, not to mention those in finance, legal and other cash-wielding positions. Be prepared to describe the problem you solve in plain language, and explain what it means to the market. Focus on the what and not the how to spark interest.
With external investors, introduce yourself and help them understand what makes you qualified to grow this idea. Tell them about yourself and your credentials, how you came up with the idea and how you plan to take it to market. Startup investors also want to know whether you have plans beyond the one product idea. Can you deliver not just a product, but a business?
Tip #2: Create a plain-language narrative that focuses on the problem you solve, not the technology that you’ll build.
If you’re pitching an idea internally, you need to spend more time emphasizing how the idea helps the organization move toward its strategic goals. They know you; now you have to prove your knowledge of your company and how it intends to grow.
Highlight the Overriding Benefit
What is it about your idea that makes it stand out? Why would an investor put money into this opportunity versus another? It’s critical that your idea offer some unique benefit to the market—and therefore the investor. Is it an exclusive solution to a problem (rare), or does it solve a problem in an entirely different way?
Tip #3: Be specific about how you crush the possible competition, or exactly why your idea is unique. These differences have to be ones that the market is willing to pay you to solve.
How will you crush the existing competition? Netflix crushed existing behemoth Blockbuster by delivering the same product—games, movies and old TV shows on DVDs—through a different channel (mail delivery versus in-store rental), and by offering subscription rather than by-the-day pricing.
Do market research and spend time to make sure you’ve solved a problem the market is willing to pay you to solve. “Cool” doesn’t bring out wallets.
Find an Advocate
Whether you pitch internally or externally, a powerful, knowledgeable advocate is vital. If you’re pitching a startup to angel or seed investors, find an insider willing to vet your pitch. When I started a small consumer products business I reached out to a former boss who’d been a COO responsible for creating the business case for rounds of funding within multiple startups. His critique of my first effort was painful to hear, but invaluable. He also put me in touch with the right investors for the product I was building and continued to help with advice and connections.
Internally, seek advice from someone who is involved in making budget decisions—finance is a great place to start. Or get your chief counsel to dig into your proposal before you pitch it to other company executives. And of course, you want your department on board.
Tip #4: Get internal advocates and decision-makers on board ahead of time.
When I was the vice president of product and marketing at a smaller company, a young product marketing manager came up with an idea that would make it easier for our transactional customers to buy from us. Essentially, it was a change in the buying workflow.
But he didn’t just come to me with his idea. First, he went to people he knew needed to be involved in the actual production of the product.
He started with the head of customer service and asked, “Could you do this?” The customer service director said, “We can’t do what you ask, but if IT can build a plug-in to make our customer information more secure, we can do this other thing to create an easier path for our transactional customers to buy from us.” They sat down and figured that out beforehand. Then they went to IT and got a commitment on what it would take to build. They worked with finance to put the numbers together. They also got legal’s blessing on the security level.
By the time they invited me and our CFO to talk about their proposal, the legwork was done and we all agreed that it made sense. And when we took it to the CEO, she also bought into the idea.
The product marketing manager and head of customer service did a great job advocating for their idea. They created a path to the revenue. They understood the obstacles, they got finance involved with the costs, and they showed us the benefits. It just couldn’t have been any easier. They were able to demonstrate that within five years their idea would generate $5 million in revenue, which made sense to the company and aligned with its goals.
Make the Ask
Ask for the money, and show them how you will use it. If you’re looking for later funding rounds for a startup, you will likely work with an accelerator program or private equity or legal team. Be specific about what you’re asking for, how you’ll use it and how you’ll measure success.
While people argue that a formal presentation isn’t necessary, I disagree. The 10-slide deck—no longer—is a classic benchmark that works. An added bonus: creating a succinct presentation that gets their attention requires you to focus. And while internal stakeholders may already know who you are, if you share a specific, well-crafted PowerPoint, it won’t fail to make a good impression.
Tip 5: Ask for the money, show how you’ll spend it and what success looks like.
Regardless of whether your pitch is internal or external, be excited, be passionate and be clear. Then back up your enthusiasm with numbers and a solid plan. Never let your exuberance get in the way of a clear-eyed assessment of risks, costs and competition. You need to be a hard-headed business person and an evangelical advocate. Tell your story to get them hooked, then pitch the data to get them to commit.
To view the article, visit: https://www.pragmaticmarketing.com/resources/articles/pitch-to-win-how-to-get-funding-or-approval-to-build-your-great-idea