When pitching to investors, you must show how your product or service will make a profit. In order to convince them to invest in your business, you should be able to answer these three questions:
1. What is My Niche?
Before pitching your idea, it is critical to understand your product and target market. You must provide reliable data to demonstrate to the investor that your product offers actual interest. Apart from knowing your target customers, you should also know how to reach them. Knowing your potential competitors is crucial as well.
Along with supporting your reasonings with statistics, you must provide real-world examples. One of the best methods for discovering such examples is through "bottom-up" analysis. Jeff Haden , a columnist at Inc.com, defines this approach as being “calculated by estimating potential sales to determine a total sales figure. A bottom-up analysis evaluates where products can be sold, the sales of comparable products, and the slice of current sales you can carve out. While it takes a lot more effort, the result is usually much more accurate." This analysis is ideal for both beginners and experts who have identified a problem that requires a solution.
2. How Much Money Do I Need?
This question helps determine various factors like where and how to pitch your company. If you have not started operations yet, you must understand the amount of capital you need to get your business running. If you are already operating, you should know how much you need to take your startup to the next stage. Knowing how much you need to get started ensures that you do not get too little or too much funding.
Understanding the amount of money you need also makes it easier to determine where to pitch your startup. If you require more money than what you have managed to gather, you can reach out to agencies and individuals like:
- Incubators . They help startups grow during their initial stages. They also provide free access to resources and mentors.
- Angel investors. These are wealthy individuals who can either assist a startup during hard times or provide seed money.
- Accelerators . They focus on the idea stage and provide money that the startup can use to pitch to venture capitalists.
- Venture capitalists . These are people who provide capital to businesses showcasing growth potential in exchange for an equity stake.
3. Can I Define My Startup in One Sentence?
If you cannot summarize your startup in simple details, investors may not understand your pitch or even lose interest. In this case, you may have to go back to the planning stage and revise your pitch.
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