Posted: Wed 24th Jun 2015
Since launching Squirrel, a financial wellbeing platform that empowers employees to regain control of their financial lives, founder Mutaz Qubbaj has been through the Barclays Techstars Accelerator, joined the Wayra UnLtd programme, pitched at the WIRED and Pitch@Palace competitions, made the FinTech50 and won InnovateUK's IC tomorrow Fintech Innovation Contest. Based on all those experiences he shares nine tips for pitching your startup to potential investors.
An important part of our journey to date has been securing backing and support, whether in terms of insight, knowhow, mentorship or funding. It hasn't always been easy, but we've learned some valuable lessons along the way. Whether it's a seed fund, angel, government grant or competition you're pitching to, there are a few golden rules worth bearing in mind.
1) Be clear about your value proposition
You need to be extremely clear about the problem you're solving and why it's important, what your solution is looking to achieve and for whom, how it works and how you can prove that it does. It's definitely worth the time and effort to work on your messaging. Try varying the length of your pitch (30 seconds up to 10 minutes) as well as the audiences of test pitches. I'd suggest pitching everyone, everywhere until it becomes instinct.
2) Be passionate and make it personal
You want investors to get a feel for your motivation, and for them to see that you are really driven about what you're looking to do. Investors look for entrepreneurs that are going to persevere through extremely difficult and frustrating times during their journey.
Making your solution personal is a solid strategy to go with. Couching your motivation in a past struggle that has affected you or someone you know shows that you have a particular interest in making your solution work!
3) Talk about your vision, but highlight your action plan
An investor may be motivated by your vision, but will likely be the most focused on whether you've thought through execution. Having a good (not necessarily perfect) idea of the next steps for your business could make all the difference between the investor picturing you buckling under the weight of a grand vision, versus evaluating you as a founder that can execute and adapt an implementation strategy according to your business' needs.
4) Know your market
This is crucial and will likely come up in every initial investor conversation you have, specifically around questions such as 'how big is your market?', 'who are your competitors?' and 'how are you different?'.
Highlighting a large market size allows you to convince investors of the potential of your solution. What is more important than that large number is showing that you have an idea of how much of that market you think you can capture. Drill down into the details if you can on this one.
Additionally, highlighting that there are similar ideas in your space showcases the potential demand for your product. Just be prepared to have a bulletproof answer for what separates your solution from the pack.
5) Get to know your (potential) investor
This is key to any meeting you have so do your research! If you're looking to convince someone to put money into your business, it's always good to know a bit about their background and past investments. Look for investors that have invested in your space before. This information might be available on their LinkedIn profile.
An important exercise is figuring out what boxes you need to check as a startup to become valuable from their perspective. Do what you can to come out of an investor meeting with that investor-ready checklist.
6) Ask 'who else?'
A question that should come up during a potential investor meeting is 'who else should I talk to?' The reality is that you're likely going to be sitting in front of somebody with a good network who could potentially put you in front of other investors that could take an interest in what you're building.
So it's always worth a shot! If you have an investor on board, you've already been vetted by their evaluation process and they may want to talk up their investment.
7) Get family and friends involved (only if you're comfortable)
Think of this strategy as a way of helping potential investors get over questions like 'will I be the first to invest?', 'will I be the only one investing?', and 'will this start-up still be around if I don't invest?' This applies just as much to grants and competitions as it does to angels and venture capitalists.
Getting friends and family involved also shows an additional commitment to the success of your venture. There is an emotional tie to the money invested in your company.
8) Pay yourself in equity (if you can afford to)
Paying yourself a low founder salary and tying yourself to the success of your company through your founding equity is a sign that you're looking to put your money where your mouth is. As with the previous point, it's a strong signal that you have significant vested interest in the success of your company, and that you've bound yourself to the outcome.
9) SEIS is your friend
The Seed Enterprise Investment Scheme (SEIS) can make the investment decision for early stage investors a little easier. Investors can receive initial income tax relief of 50% on investments up to Â£100,000 per tax year, and may be exempt from capital gains tax on and SEIS investment if they hold on to it for more than three years.
Look into SEIS advanced assurance and whether you're eligible. It's also worth checking EIS when raising larger funds as well.