The 3 things you MUST do in an Investment Pitch

We live in a digital world. The internet has changed nearly every facet of our lives and it is amazing to have experienced this change.

Websites like Kickstarter, Indiegogo, and the many other crowdfunding sites (check out Finding Help for your Innovation for more) have given innovators unprecedented access to potential investors. In business though, sometimes the ability to look someone in the eyes, have a true conversation, and shake the other person’s hand is the best way to ensure mutual goals are achieved.

Pitching a proposal to a potential investor is an art, however, there is science behind it. There are three things you absolutely MUST do during a pitch of this nature. The order in which you deliver these three things are extremely important too, however, the order should vary from one pitch to the next. After reading this, you may think, “well, that’s common sense”, but no, it’s not.

Identify the Problem

Simply put, if there isn’t a problem, you don’t have an innovation. Discussing what constitutes a problem is a completely different conversation. What was wrong with a cassette player? To the majority of people, nothing, but some very smart people recognized that music could more enjoyable. The PROBLEMS were (among others) sound quality, selecting a specific song, and portability.

The problem you identify might be a social issue, an improved way of sorting recycling, a better way of brewing beer, or many others.

Identify the Solution

If you haven’t identified a solution, you don’t have an innovation, you are just complaining. The majority of people in the early 80’s didn’t mind cassette tapes. They didn’t recognize that there was a problem in the first place, so there was no problem and no need for a solution. At some point, somebody was probably listening to Billy Joel 52^nd Street. They didn’t want to listen to Big Shot (track 1), they wanted to listen to My Life (track 3). They got tired of mistiming the fast forward and missing the first 30 seconds of the song, or having to listen to the last 30 seconds of Honesty (track 3). They got so frustrated, they started trying to figure out how they could go directly to My Life.

Ok, I of course made all that up, but that’s how a lot of innovations actually start. Out of frustration, pure, unadulterated frustration. When you have identified the solution to a problem, NOW you are an innovator.

Explain how it will be Profitable

This step has nothing to do with innovation. It has everything to do with business. It does not matter if the problem and solution you identify is best suited for a non-profit, starting a business, or developing a product with intent to sell to a business; you STILL have to show a potential investor how your solution will be profitable (or self-sustaining in the case of a non-profit).

The potential investor isn’t going to give you money without something in return. Normally, they want a good return on investment (ROI), in the case of a non-profit it might be a tax break, but they need the confidence that they are going to receive a good ROI, and that is what you have to show them. I can assure you, they are more interested in a safe, yet smaller ROI versus a risky, yet larger ROI.

Let me know what you think!