Both the economy and society have entered an unprecedented era of technological integration. Amongst this new virtual lifestyle is the digital and virtual economy. While access to information has dramatically increased with the introduction of the internet and a priority put on transparency, it has also made it easier for individuals to enter the realm of entrepreneurship. Before jumping in head first, you’ll want to learn the lay of the land. The market of entrepreneurs is rich, hyper-competitive, and supersaturated. Having a well-thought-out plan to take your idea for a business from conception to realization will help you break into the market and succeed with your ventures.
One of the most challenging parts of getting a start-up organization off the ground is sourcing the funding. There are various ways that entrepreneurs can secure funding for a venture, but access to these avenues vary. Finding an investor or group of investors that believe in your idea and the return possible is a funding strategy that works for many entrepreneurs.
However, securing an investment from a venture capitalist like Carter Reum, an angel investor, or other financier takes preparation. Before pitching your idea to the investor, here’s what you need to know.
The Importance of a Value Differentiator
The value differentiator makes your product or service stand out compared to any competing products or services that already exist on the market. As such, it’s one of the first aspects to identify in any entrepreneurial venture. This is, sort of, what the entire business plan is going to revolve around. It will attract consumers’ attention and win them over, and also help win an investment.
A value differentiator isn’t just something to conceptualize and forget about. This needs to be a primary driver in the organization. Furthermore, before any investment pitches are made, the value differentiator should be realized in some capacity to prove its validity.
Knowing the exact consumer or business problem the product or service is solving will help identify and define the value differentiator in any given startup organization. Investors will specifically want to understand; what problem you are solving with your product or service.
Presenting a Prototype
Whether this is your first venture or your 50th, the power of a prototype is very real. Investors love to see ideas turned into reality. On top of that, they want to see a certain intrinsic motivation to continue succeeding, driving, and innovating. As such, having a real-life prototype for investors to see or experience is a great way to win them over during the pitch and increases the likelihood you’ll land an investment.
Prototypes, even rough prototypes, should demonstrate the value proposition of the product or service and how it will benefit the target market. This will help investors physically see the value in your business.
Knowing the Market
There are few things as important as research when launching a new startup organization. Having your thumb on the pulse of the industry into which you’d like to break will help you position yourself strategically. This will help you develop successful marketing campaigns and directly connect with your target audiences.
Having this research at the ready is vital in investor pitches because it demonstrates an understanding and appreciation for the inner workings of the marketplace. This helps instill confidence in the investors that you know what you’re getting into and have a solid plan moving forward.
Proof of Concept or Sales Figures
There are many different moments in an organization’s lifetime at which an investor pitch may occur. Of course, there are the initial rounds of funding; but this so often comes from the individual. The first round of funding is typically just to get things off the ground and to prove the concept’s validity.
After some proof of concept or some realized sales figures is the prime moment for an investment pitch. At this point, you’ll have data about important metrics like profit margins and expected growth, which investors can utilize in their valuations.
High-profit margins are extremely attractive to investors and can help you win over an investor on the fence.
Final Thoughts on Investor Pitches
It’s an exciting time to be an entrepreneur or self-employed. The market is wide-open, and investors continually look for new ventures to fund. If you’ve been thinking about taking the next step with your start-up company, now is much better than never.
