How to prepare a pitch for angel investors

Raising seed funding usually involves selling your vision to individuals outside your close circle for the first time.

Many startups seeking angel investment are pitching without a fully established business and may still be figuring out their product-market fit. It can be a tricky balancing act between convincing someone your business can go the distance and being upfront about what you still need to develop.

In this blog post, we talk to startups and investors to get their advice on how to get the balance right, what to include in your pitch and how to deliver it with confidence.

1. Start with passion and drive

Investors won’t necessarily expect you to have all the answers at this stage, but they will want to know what’s driving you.

“We didn’t have much traction when we went to investors, but we made them believe in us by showing how much passion and hard work we put into the product and the brand,” said Mak Tok founder Will Chew.

Remember that angel investors are offering up their own cash, so they need to believe in what you’re telling them. Be honest about who you are and what you’re presenting – if you’re selling a false persona this will almost certainly show through.

Angel investor Simon Squibb who hosts The Good Luck Club podcast and has invested in 69 startups, says he’s always looking for authenticity.

“The business might change over time, but your core personality, your core purpose and passion won’t change,” he said. “The most important thing is that I’m investing in someone that really believes in what they’re doing, and can show it’s possible to make their idea happen.”

2. Be clear about the purpose behind the business

Being able to demonstrate why you started your business, who it’s for and where you want to take it is vital. Be prepared to answer these questions:

• What gave you the idea?
• What problem are you solving – and crucially, how are you solving the problem?
• Who do you want to help?
• What is the purpose of the business?

“It’s really important to tell your story about why you had the idea in a really compelling way. This can be a really powerful way of engaging potential investors,” explained investor and Crowdcube founder Luke Lang.

“Investors are humans, and they’re guided by instinct and gut feel. If you can stir that gut feeling with your pitch, and inspire potential investors with your vision or mission, you are halfway there.”

3. Focus on the business opportunity

The next stage is to articulate the commercial opportunity behind your idea and the value it will bring to customers and, ultimately, investors.

To get engagement from investors they’ll want you to drill down beyond the original idea and delve into the substance. Make sure you can explain:

• What the commercial opportunity is
• Why changing consumer or market trends are creating an opportunity
• What’s happening in the market and how it’s changing each year
• The competition and how the business stands up against this

Answering these questions gives investors a sense of how big the opportunity is and shows them that you really know the sector and can educate them on its opportunities.

Showing there’s traction

Anyone can have an idea, but traction validates it. While some investors might be swayed by a great story or charismatic pitch, most will want some cold hard facts to back this up.

If your business hasn’t launched or is still very new, don’t fall into the trap of thinking you can’t mention traction either. Every business should be able to provide evidence that people want what they’re offering.

Think about ways that you can demonstrate traction, for example:

• Meetings with key partners or suppliers
• Social followers or email subscribers
• A pilot or successful demo
• Customers or users

4. Get the facts and figures in order

Passion, purpose and a great idea will get you so far, but you still need to be able to back it up with some rational arguments, even in the early days.

“If people are making an equity investment, they’ll want to see a multiple return on their investment of 10x 20x 50x or more,” said Luke Lang.

“So you need to be able to convince them that your company can grow and scale significantly. Be prepared to demonstrate that the unit economics behind your business really stack up.”

Luke says that this is the data that underpins your business, including:

• How much does it cost to acquire a customer?
• What’s your lifetime value of a customer?
• What’s your projected revenue from your customers?

5. Personalise your pitch for your audience

Every angel has different criteria, agendas, skills sets and beliefs about building businesses.
This impacts who’s right for your startup and how you handle your pitch.

Lucy-Rose Walker, chair of Entrepreneurial Spark, says that when you’re pitching to different investors, research who you’re standing in front of and why you’re communicating to them.

“Entrepreneurs often make the mistake of just pitching to anybody in the hope that if they take a scattergun approach then maybe something will come back,” she said.

Lucy-Rose advises that you treat pitches to investors like job interviews – do your research so that you understand:

• Who are you in front of?
• Why are they there?
• What are you hoping to get from them and is this realistic?
• Who have they invested in before?
• What sort of return on their investment are they looking for?
• What do they look for in a team on a product?

“You need to do a bit of due diligence on them as investors. Once you understand what interests your audience you can weave that into your pitch and use language that will resonate with them,” Lucy-Rose said.

Tersha Willis, founder of Terrible and winner of The Pitch 2020, agrees that a successful pitch is one that’s tailored to the audience.

“Finding investment is always longer and more dynamic than you ever think it will be. You won’t have just one pitch deck and you won’t just have one pitch,” she said. “There will be lots of things that strike different investors’ interests and things that they’re inspired by, so you have to tailor your pitch to the individuals you’re talking to.”

How to polish your presentation

Pitching to investors is an intimidating prospect, but it’s essential for founders to get to grips with it – even the best pitch can fall flat if it comes out rushed and unintelligible.

A strong, clear, confident pitch goes a long way to demonstrating that you can perform well under pressure, and panicking during a presentation can be a turn-off.

Practice makes perfect

The key is to practise as much as you can until pitching becomes second nature. Time yourself to work out the best pace for the content you have to deliver and mark parts on your notes where you want to pause or make emphasis to avoid becoming flat.

Seven ways to practise pitching for investment:

• Stand in front of the mirror
• Film yourself and watching it back
• Use our videos to practise answering questions from real investors
• Pitch to family and friends
• Enter competitions like The Pitch
• Attend networking events
• Follow our top tips on dealing with nerves during a pitch

Learn from previous pitches

Most startups have to pitch to a range of investors until the funding comes in, so treat each one as a learning experience.

What did they ask you? What questions were you unprepared for? How could you have explained something more clearly? Reflect on the pros and cons of each experience and then refine your presentation, working on your answers and the stories that illustrate them with your team.

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