Pitching Angel investors can be a challenge. They want a lot of information, but you don’t have nearly enough time to give them what they want. We explain what is going on and give you six ways to inspire investors to act.
If you ask 100 angel investors what they want to see in a pitch, you will get 100 answers. The primary reason for this? They don’t know.
Before Angels invest, they will all want to see details like your numbers and make sure you have a viable business concept – one they believe will make a lot of money.
Investors will want to know your plan in great detail, what you bring to the business, your credentials, and history.
They will want to know that you will stick with it and make the business work through all of the craziness and long hours involved in launching a successful business.
They will want to see management skills and the ability to pivot when necessary.
They will want you to prove to them you are worthy of their hard-earned money. After all, investors are putting money behind you in the hopes of getting a good return.
They know what they want to see in your business and they know what running a business takes.
Investors would love to know all of this in the first few minutes after they meet you. But, that is impossible, communicating everything investors need to know takes hours.
But you only have 6-to-10-minutes to pitch.
You can’t fit everything into this time frame.
You will be hard pressed to fit that into a two-hour deep dive (which is why due diligence takes so long).
If you try to put everything into your pitch, you end up with a long list of data that nobody can understand. Remember you only have about 8 seconds to pique their interest.
Also, keep in mind that investors are not interested in you or what you do. Their lack of interest sounds paradoxical, but remember that they are interested in themselves and how they will make money. You are just showing them how you will help them do this.
If you end up taking everybody’s advice and answering all of their questions in your pitch, it will be terrible. Your presentation will be so full of data and information that nobody will pay attention, and nobody will remember.
Even though you just told them what they said they wanted to hear.
Sidebar story: Why you should not “Prophylactically” answer questions
At the Westchester Angels, we had a company present us with an idea for wind turbines. The idea was attractive to a few of our investors, but the pitch was a disaster. The pitch was slide after slide of data and information that none of us could digest.
At the end of the pitch, there was not one person interested in learning more about this business or working with the entrepreneur.
When we advised the CEO on his pitch and how to improve it we told him to simplify it and create a story that investors could follow. He explained that he couldn’t because he had to answer “prophylactically” the questions that would come up.
Not many investors use that phrase, but almost all of them try to do the same thing: answer every question that might ever come up. Even if you have every answer, providing them up front will turn investors off.
This is true even though investors may tell you they want every answer.
So how are some people able to get funded?
The first step is to create a pitch for investors that connects.
I was on a panel of angel investors watching lousy pitch after bad pitch when one of my fellow panelists turned to me and said:
“don’t they get it? We want to be able to go to a cocktail party and be able to say that we invested in that great company in the beginning.”
And therein lies the clue to connecting with investors: they want to be the hero.
They won’t ever use this language, by the way, but ths is what they want. When they are listening to an 8-minute pitch, they are looking for the numbers, evidence and a great idea. But, mostly they are looking for a spark of confidence that you are the next great entrepreneur.
People, including investors, don’t remember facts. Facts matter, but they don’t connect. You must connect with, not inform, your investors
Stories engage and the best pitches tell a story with a compelling market challenge, a great solution, and a clear pathway to making money.
They inspire investors with the opportunity.
The key word is: inspire.
Good pitches don’t inform or bombard with facts, they inspire.
Skillfully investor presentations connect to something internal, a feeling. So, don’t spend all of your time talking about your product – investors are there to make money not look at prototypes.
The most spectacular investment pitches give the investors a story that is so good the investors can’t help telling their friends.
So, to create the perfect investor pitch focus on inspiring your audience, this will initiate the growing snowball of interest that funds a startup.
How to inspire investors
The key thing to remember about investors is that they are human. Since they are human, they have a brain that is structured first for inspiration and second for comprehension. So inspiration is not a difficult task: you appeal to that part of the brain that is looking for inspiration. Engage has a post on appealing this part of the brain, the Reptilian Brain here and here is a summary, of the six ways:
Make your pitch about the investor.
Remember the investor cares about him or her self, not you. So focus your pitch on what they gain and how.
Contrast is a very useful tool for inspiring investors with what could be and instilling a bit of fear of missing out. Show what life is like before and after what you do. Show pictures of success versus failure.
Use tangible concepts
This part of the brain can’t deal with abstraction; so get tangible. You have to make your offering simple and easy to understand. Even your language must be tangible and easy to understand. Your concepts are complicated enough so your language must be something a fourth grader can understand.
Focus on the beginning and the end
These are the two most powerful parts of your presentation. So have a great beginning and a great ending. Almost always, probably 99.9% of the pitches I have seen, the conclusion is lousy. It is mostly a rush to get to the end before the time runs out. Leave yourself time end on a powerful high note that begs for more.
The optical nerve feeds right into the reptilian brain; this is a direct line to inspiration. So use it. Get visual.
Finally, the reptilian brain is emotional rather than rational. So appeal here to emotions. Be careful here because this is easy to overdo in investor decks. You don’t want to be unprofessional. But you do want at least a hint of emotion, fear of missing out, excitement, opportunity. Investors may be cold-hearted business people, but they still have a brain.
So remember, inspire don’t inform
You should not take this as a trivialization of the detail and information that investors will want to have before they invest. Investors know what they are looking for and they will want every question answered before they invest.
However, the pitch is not the place to do this. Even investors don’t realize this most of the time. The pitch is where you drive interest so that the investors will ask the questions they need to ask to eventually invest.
So, in your pitch inspire. Later, you can inform.