When is the right time to pitch to investors? Anyone who wants to start a business needs to learn how to pitch to investors. Despite their importance in raising funding for the startup, many founders fail to understand how to create fundraising decks and do not bother learning how to give pitches or build investor relationships until they have to. Irrelevant if you are a first-time startup owner or are raising Series B capital, we are here to help you in your fundraising approach and help show you the right time to pitch to investors.
The Ultimate Guide To Pitch Decks
Here is the content that we will cover in this post. Let’s get started.
- 1. Timing is Key
- 2. Pitching When The Money Is Available
- 3. In Time To Get The Money In The Bank
- 4. To Stay Competitive
- 5. You Are Prepared To Pitch Well
- 6. Your Investors Are Ready For The Ask
- 7. Is Your Business Performing Well?
- 8. Are You Protected?
- 9. Traction
- 10. Team
- 11. Market Size
- 12. Do Your Research
- 13. How to Reach Out to an Investor Once it’s Time
- 14. Shortlisting Investors
- 15. Create A Great Pitch Deck & Presentation
- 16. The Bottom Line
Timing is Key
Timing your pitches is vital for several reasons. This includes the following.
Pitching When The Money Is Available
Capital markets and investment appetites are always changing. Trying to raise during COVID was nearly impossible for some startups. INvestors just closed their doors and locked themselves down for months, without even answering the phone. Even those who thought they were about to close on funding found they were receiving emails pulling out of funding that had already been committed. The same can happen in other times of economic crisis.
The luckiest entrepreneurs were those that had raised early and raised more money than they needed, so they wouldn’t be caught short in times like these.
In Time To Get The Money In The Bank
Receiving a term sheet and offer of an investment is just the start of the process. There can be weeks or months of due diligence, renegotiations, and legal before you get to closing. Be sure you are pitching in plenty of time to get through this, and actually get the money in the bank before you go bust.
To Stay Competitive
If a competitor beats you to your desired investors, or they take the money and gain too much ground in the market and attention, you may find it tough to pitch in their footsteps.
You Are Prepared To Pitch Well
Investors are busy. Just landing a meeting and the opportunity to present your pitch deck can be hard enough. Don’t blow it because you were prepared with a strong pitch and pitch deck.
Be sure you are educated on the whole fundraising process and know how to navigate it. When you’re ready with a great presentation, that’s the right time to pitch to investors.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
Your Investors Are Ready For The Ask
Savvy founders are preparing their investors for the ask months before they are actively fundraising. They may have been building connections and relationships with those individuals even months or years before that.
A critical aspect of knowing when to pitch for funding is also knowing the best sources of funding for your business. If you need more information on how to identify the right investors, check out this video I have created. You are sure to find it helpful.
Is Your Business Performing Well?
Investors want to invest in businesses that are performing well.
You want to make sure that you are in a strong position to attract and negotiate funding and have gathered the data to back it up.
Some important things to think about include:
- Is your business growing at a competitive rate of traction?
- Do you have revenues?
- Is your company performing on par with others at the same stage of funding?
- Is the outlook positive?
Let’s dig in even more to the most important factors investors are looking at when deciding to invest or not.
Are You Protected?
When you start pitching and putting your ideas and sensitive internal information out there, there is always the risk that someone will take it and run with it.
Investors also want to invest in truly valuable assets.
With this in mind, you should have legal agreements prepared to protect you. Your team should be under appropriate non-compete and NDA agreements. Your IP should be trademarked or patented.
Investors are looking for a defensible edge or moat, that will keep their investment protected, and their equity position valuable, even in spite of competition from incumbents and other new startups.
Traction is incredibly important to investors.
They want to see that you can focus, can execute, and can build a real business. You also need to prove that you can grow fast enough to deliver on their expected returns. When you can demonstrate great traction, that’s the right time to pitch to investors.
Each investor may have their own desired rate of traction at different stages. Though if you aren’t at least growing 10% month over month in the early stages, or doubling each year during your follow-up rounds, then you probably aren’t growing fast enough.
Traction may be measured in different ways. Find the metric you want to focus on and can really own, and hone in on that.
This may include:
- Customer count
- Sales volume
- Employee headcount
You need the best team in the business to be able to succeed. The strength of your team is also one of the biggest risks and deciding factors for investors.
Before you start pitching, make sure that you have a team they will be completely confident in, or preferably wowed by.
You need to cover all the bases. Not just being the best technical minds behind building the product. You need real business acumen on board. If you can’t offer that among your cofounders, then fill these gaps with your executive team, key hires as department heads, and notable advisors and board members.
Look for any ways that you can demonstrate your grit and tenacity, so they know you won’t quit, fold the company, and lose their money.
Today’s startup investors are mindful of their time and are looking for big returns and success stories for their portfolios.
You are not going to be able to deliver on efficiency in their investments, and huge returns, unless you can build a really big company. That in turn requires a really big market.
Take a look around and you will see other entrepreneurs out there focusing on building companies that can be worth at least $50B to $100B and in multi-trillion-dollar markets.
If you are not thinking on this scale, then that’s not the right time to pitch to investors.
Do Your Research
It’s not enough to just send out a pitch and hope investors will be interested, you have to do research on who you are targeting, and prepare and personalize your messaging so that it makes sense to them, and for their goals.
If you’re going after investors, for example, you’ll want to make sure you’re pitching them at a time when they’re looking for exactly what you offer. For example, if your product is meant for small businesses but the investor only invests in companies with over $10M in annual revenue, then you need to find someone else. If the investor only invests in education technology startups, then make sure your product is education-related.
One of the best ways to determine if now is the right time for investors is by checking out Crunchbase or AngelList: both websites feature databases of angel investors who’ve backed recent similar ventures. You can also look at the portfolios of companies VCs have invested in on their websites. Talk to a fundraising advisor to find out who is investing, and in what.
How to Reach Out to an Investor Once it’s Time
So, now that you have all of the pieces in place and are confident that it is the right time to pitch to investors, let’s look at the next steps.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Too many noes can demoralize you, and your team’s morale will go south too. You can protect your own endurance and time by being picky. Don’t talk to angels or venture capitalists who are unlikely to be uninterested in your product or service.
As mentioned, you need to do thorough research. See who is finding, and whose criteria you meet. As well as creating a list of ideal dream team investors you’d have on board if you could cherry-pick them.
Then start reaching out to them. Go where they are looking for startups to invest in, get introductions, and begin building relationships with them. Once you’ve built adequate familiarity, that’s the right time to pitch to investors.
Create A Great Pitch Deck & Presentation
Entrepreneurs can spend a massive amount of time fine-tuning and tweaking their pitch deck, and rightly so as well. It can literally take hundreds of meetings with investors before you get your first round of funding. It may take a couple of years to pitch the business idea before finding the right investor.
The goal here is to make a slide deck that is easy to use and gets people interested in your business. Start the pitch with a story that is interesting. It should talk about the problem you are trying to solve in the market. This will save time and get people interested right off the bat. Try to include real data if you’ve done any testing.
Realistically, think about what problem or problems your product helps solve and divide your target sector into TAM (total addressable/available market), SAM (serviceable available market), and SOM (serviceable obtainable market). When you talk about your target audience, if you can, try to come up with a user identity persona or a detailed description of your ideal customer.
It’s not a secret that pitching to investors is a stressful process. The questions you’re asked, and the advice you get from people who’ve been there before, can all feel overwhelming. But if you can manage to stay calm and think clearly about what’s going on, you’ll be able to make sure that when the time comes for your next funding round, you’ll be ready to pitch in exactly the right way.
Get a head start by using a proven pitch deck template. Once you have the template ready and good to go, that’s the right time to pitch to investors.
The Bottom Line
The right time to pitch to investors is when you, your company, and your pitch deck and presentation are polished. You don’t want to burn priceless opportunities with prized investors. Though the sooner you get out there pitching the better. The faster you’ll get feedback, be able to tweak things and be able to hit the market with more funding.
What is most important when considering the right time to pitch to investors is that the fundraising process takes time. Even getting from a term sheet, through due diligence, to money in the bank can take a lot longer than you think.
In advance of that, it may take months or longer to build the trust and relationships with investors that are needed to secure funding from them.
Ideally, you need to be months or a year or more ahead of when you actually need that money to hit the bank.
With this in mind, you should be thinking about your next funding round before closing the current one, so that when the time comes around again, you’ll have everything figured out and in place.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it.