Hello, everyone. This is Alejandro Cremades,
and today we’re going to be talking about the steps to take to pitch an idea to an investor.
So what are the steps that you take when you want to pitch your idea to an
investor? Obviously, the media paints it as something being super simple.
There is this company raising whatever millions, this other one, also millions,
but it’s not that easy, and there is a certain methodology and process that you need to follow
in order to make it happen. In today’s video, we’re going to give you all the insights,
and we’re going to be breaking it down directly for you. So, let’s get into it.
Market research & business planning. This is exactly where you want to start. You want to
research, who are your competitors? How much have they raised? What were the potential valuations?
This is stuff that you can find on Google, and there are some reports out there that you can use.
Then, you can put together a business plan. Now, business plans, they’re using them in a
different form. Before, they were used to raise money, but now business plans are becoming more
and more as a tool that you use internally to really understand and guide you through the
next 18-24 months of execution and something that perhaps investors will want to look at.
But this, essentially, is going to allow you to be prepared and to know the answers
to the questions that are going to be coming your way when you meet with those investors.
Then, you want to create your pitch deck and supporting materials. The pitch deck is just like,
for example, the template of the pitch deck below that founders are using all over the world to
raise millions, which you can use today for free, so take a look at it. But, essentially, it is
15-25 slides where you convince and compress your story in a way in which it gets people excited.
Now, remember that typically, investors only allocate 2 minutes and 41 seconds to review a
pitch deck, so you really need to understand how your balancing the visual with the text, how you
have a nice flow and a nice structure on the story over the course of the slide to slide, And that’s
essentially what you want to do on the pitch deck. You want to capture how exciting the future
is looking ahead, how big the market, how great of a compounding annual growth rate your market
has so that people are getting super excited. There are other supporting documents that you
want to have in place for this, and those are the following documents:
One-page business plan Action plan
Executive summary Investor updates
Emails Explainer or intro videos
Profile pages Press releases
On top of this, you also want to create the elevator pitch or that narrative where
perhaps you are in-person so that you don’t sound robotic. It sounds as it is coming from the heart;
it’s authentic. Authenticity, when you’re raising money, is critical. So, never sound like a robot.
Putting a good team together is essential. They’re always going to want to make sure that you have
the right people. For this, you want to understand that the people you’re bringing in is not because
they were your best friends in college or because you enjoy having a beer with them,
but it’s because they are people you respect, and they bring a certain expertise that you do
not have or that anyone else in your team has. So you want to have people that can showcase
that you have that collection of individuals. They’re coming together. They’re going to help
the business to adapt to whatever the market is requiring from them. Again, A+ people.
This is exactly what is going to help get that investor excited in understanding,
“I want to invest in these guys,” or not. Remember: venture investors always
invest in people. Obviously, as you grow and as you mature as a company, you’re going to encounter
other investors like private equity firms. But the earlier that you are in the process,
you’re going to have your friends and family. You’re going to have angels.
You’re going to have angel groups and also venture capitals. But all of those, at an early stage,
are ultimately betting on you. For that reason, you want to make them understand that
everything that you’ve done in the past and all those skillsets that you and your ream have are
really going to help on delivering on your promise and on having a masterful execution.
Start working, as well, on the basics. Obviously, in addition to having your team,
you want to have the little details as well. You want to have your minimal viable product,
which is either like the smallest thing that you can of your product or service to showcase that
and to show that it’s tangible, and what it’s going to look like, or what it may look like.
You also want to have the right type of structure from an entity perspective that maybe your
corporate lawyer helps you to structure. You also want to have your taxes in place, your accountant
in place, because that is ultimately going to show the investors that you’ve done
your homework. And that you’re serious. You also need to research your investors
and whatever platforms that you want to use. Maybe online to launch yourself and get money
because here’s the thing: time is of the essence. You want to allocate your time with investors that
are going to be interested or that have an investment thesis where your opportunity is
a clear fit. You don’t want to go after investors where there won’t be a fit because you’re wasting
their time; you’re wasting your time, and time is everything that you have. So, always go
for investors where they perhaps have invested in companies that were similar to yours or that
you know they’ve written about their investment thesis, they talked about how excited they were
about opportunities like yours. Also, you want to keep into consideration the following factors when
determining whether or not they could be a fit. Stage of the business they’re seeking to fund
Amount of funding they like to provide at this round
Additional help and resources they can provide beyond the money
Typical terms they’re likely to offer on-demand If you’re the type of industry and business
model they want to fund If you’re aligned in values
and theory for growing a business If your timelines for an exit match
The doors this funding partner could open or close for the next round of funding
Also, don’t just look at the firm. Maybe if it’s an institutional investor, a venture capital firm,
or an angel group, try to see: who is that individual? What kind of quality as human
beings do they have? Ask them to introduce you to a founder of a portfolio company that failed.
How did they behave with that founder when things were on the other side of the mountain?
Were they able to roll up their sleeves and jump in and do whatever they could to turn it
around? Did they treat that entrepreneur as a write-off that they knew it was going to fail,
and they did not want to allocate more time with him or her? Those are the things that you
want to know because it’s going farther beyond the logo. It’s not about the logo. It’s not about the
company. It’s about who is going to be helping you? Who is going to be sitting on your board?
You want to have people that are not only great investors and that can identify good
opportunities, but also people that have that great quality of being great human beings.
Start making investor connections. Literally, I’ve got to tell you that the best way
to introduce yourself or get that connection to investors is by entrepreneurs that have received
an investment from that investor that you’re looking to target in the last 6 to 12 months.
Those are the best ones because they are already in that circle of trust. You need that push, that
social proof, that background relatedness that that entrepreneur that is already in that circle
of trust of the investor that you want to target so that they can push you and get you there.
Essentially, I always hear from other founders, “Oh, my gosh. Getting in front of people is
so hard.” It’s not hard. We live, right now, in a world that is super connected and super
transparent. There aren’t a lot of degrees of separation from one another, so there are no
excuses for you to get an entrepreneur that is at a Series A or at a Series B that has already
raised some money, that has maybe between 15 or 30 investors at that point that you connect with
them, and that you build a meaningful relationship so that they introduce you to their own investors.
I would love to hear on the comment section how you’re going about it. Also,
don’t forget to Like the video and to subscribe to the channel so that you don’t miss out on all
the videos that we’re rolling out every week. And take a look at the fundraising training, which is
the fundraising program where we help from A to Z with everything related to fundraising. There,
you’ll find live Q&As, templates, agreements, a community of entrepreneurs helping each other
all over the world, and you’ll find tremendous value in it. So, thank you so much for watching.