Advice: How to pitch to an investor

Owen Trotter has been a professional investor for over 30 years in the UK, Europe and North America.

For the last 15 years he has run his own investment firm Key Capital Partners (KCP) which has invested approximately £200 million into 26 different businesses. Here he shares his expertise about pitching to potential investors to increase your chance of success.

It can be really difficult to secure finance for your business. Entrepreneurs need to be prepared to have a LOT of meetings. Not everyone is going to raise money, that’s the truth of the matter, but you need to put yourself in the best position by starting early and being well prepared.

Taking investment into your business means entering a partnership with your investor. You both need to understand the risks and opportunities. It’s important to be clear about your obligations to each other and your expectations of each other. Make sure you share the same vision for the business so that you have mutual respect, understanding and transparency throughout your relationship.

The first meeting

The first meeting or "pitch" is just the first stage in a long process that may or may not lead to investment. It's a first date, not a wedding and needs to be approached in that vein. Your objective from the pitch is to give an overview of your business to the investor, help them understand what you see as the opportunity and also help them assess whether you and your team are people they can work with. 

For your part, you should be evaluating whether the investor can add value to your business and whether you can work with them, in good times and bad.

Before the pitch

Before the pitch make sure you take the time to research the investor you are about to meet. What have they invested in before? Have they invested in other local businesses? Where does their money come from? Do they profess expertise in your sector? The more you know about your audience, the better prepared you'll be for the questions that you will undoubtedly be asked and the better able you will be to pitch your presentation at the right technical level.

The pitch itself

Like a first date a pitch should be a conversation, not a lecture. Avoid 'death by powerpoint' and limit your presentation deck to no more than ten slides, covering the key facets of your business. An example running order might be:

1. Introduction to the business and brief description of what it does
2. Overview of your market, customers and competitors
3. Overview of your product/technology/service
4. Bios of management team and description of workforce
5. Historic and forecast financial performance
6. Details of the current ownership and funding structure
7. A description of how much money you are trying to raise and what you plan to use it for
8. An assessment of the exit routes - how your investor will be able to get their return (generally a trade sale or IPO of the company)

The objective is for the pitch to become a two way discussion about your business. This will enable you to ensure that your audience gets the information they want out of the meeting while at the same time starting to build the personal chemistry that is important to securing the right investment partner. As part of this process, you should ask the Investor to tell you about their business and some of the other companies they have backed.

What not to do

Don't leave it too late. Start raising money early. It's a time consuming and drawn out process. Telling an investor that if they don't invest you'll run out of money in a month, will probably lead them to reject your proposition and, at best, gives them a strong negotiating position.

Unless asked, don't tell them what you think your business is worth. As an investor, it always puts my back up and I've rarely seen anyone achieve the valuation they initially put on their business.

If you don't know the answer to a question, say so. Investors can smell ‘waffle’ a mile off and if they find out later that you've told them something which turns out not to be true, the deal will be off. This isn’t Dragon’s Den, that’s a TV show.  This is professional investing, not about entertainment.