7 Ways to Pitch to Investors – Power of Persuasion or Influence?
Many decisions are made after interpersonal persuasive communications that take place, like pitching to investors, sales presentations or even at fundraising events.
These interactions are often formalised by persuasion models.
These approaches are based on either emotion, logic, bargaining, and even compromise.
For example, if there is a low level of intuition, but you are good at influencing others, then the best approach would be to use logic in negotiations.
Let’s discover which approach is better.
- Influence is having a vision of the optimum outcome for a situation and then, without using force or coercion, motivating people to work together toward making the vision a reality.
- Persuasion can be used to spur someone to action or to decide without earning their sincere buy-in.
What is influence?
People can always be influenced, but the influence may not be in their best interest.
You see, power of influence comes in a few flavours:
- Influence is the power to have an important effect on someone or something. If someone influences someone else, they are changing a person or thing in an indirect but important way.
- Undue influence is by which a person is induced to act otherwise than by their own free will or without adequate attention to the consequences.
What is persuasion?
- Persuasion is the action or process of persuading someone or of being persuaded to do or believe something.
So, is it better to persuade someone to buy something that comes with a discount, or influence them into buying something at a premium price?
I believe it is not about pulling or dragging someone into doing a deal, it is about educating them on the merits of the opportunity and in influencing them to do what they were already going to do anyway.
There is an incredible feeling that comes from being able to influence someone into changing their mind when done with good intent with benefit clearly articulated.
Pitching to investors should be approached with the same thing in mind.
How to pitch to Investors?
One of the most challenging aspects of starting a fund or new business is finding investment or funding.
The risks versus rewards of investing can usually have investors worried about jumping in.
The responsibility then lies with entrepreneur to make their business venture exciting and attractive enough to warrant investors’ attention.
No matter whether the funding comes from friends, angel investors or venture capital firms, the entrepreneur must have a clear strategy for obtaining this this investment.
Here are 7 Ways to Pitch to Investors
When pitching to investors, we offer some of the following strategies in persuading someone to invest in your fund.
- Focus on Results
Lead with your results and don’t be shy to promote your successes to investors as that is what they are looking for.
Don’t even consider hoping onto the capital raising band wagon without having decent proof someone will buy your product.
Build your product offering and then start selling.
The more business results you can share with investors, the easier it will be to get investment.
As the entrepreneur, you hold the role of building and selling in your company.
You sell your vision to your employees. You sell your products and services to customers.
And you sell your passion, riches, and self-importance to investors. You need to persuade investors to investing with you.
- Create A Killer Pitch Deck
I can’t emphasize the importance of having a killer pitch deck, as majority of your success in getting investment will depend on the visuals of your presentation.
The presentation should be short, and not text heavy with a focusing on founders and company including the problems to solve.
Use the pitch deck to explain your idea and model to potential investors. Break down the complex concepts using graphics and charts.
- Be Completely Transparent
The key to getting any investment is transparency. It means being timely, meaningful and in providing reliable disclosures about your investment opportunity and company’s financial performance.
Companies need to provide transparent financial investors so they can make informed investment decisions.
You could approach a few people in your network who have displayed some interest in your offer and giving them your pitch for their consideration.
If you get positive feedback, take the opportunity to give them a full presentation.
If they proceed to make an investment, keep investors up to date on a regular basis, so they can see and understand the status of their investment.
- Offer Dividends or Equity for Investment
Depending on the type of fund you establish, you will offer investors dividend payments or equity in return for their investment.
Unit holders general receive dividends, where they will receive regular payments which provides cash flow as an incentive.
Whereas equity participation offers payouts in the long term, which means the investor needs to be in the transaction of the long term before receiving benefit.
The immediate rewards, via regular dividend payments, are a well-designed package that make the investment much more attractive to potential investors.
You need to be specific with the amount of investment you are seeking and projected dividends or equity participation in your offering.
One thing to remember, is investors are interested in fail-proof investments with immediate, as well as long-term, returns. Having a sample income report to show will help investor better understand the opportunity.
- Creating A List of Objection and How to Combat Them
To increase your confidence in promoting your investment offering, consider coming up with a list of objections.
Think of all the reasons why investor will come up with for not investing with. Then, go through the list and find answers to their potential objections.
Being prepared with a list of questions will help you provide a better and timely respond to their concerns and even be able to combat their objections as they arise.
They will also find your confidence and readiness impressive, which will make them more likely to invest with you.
- Consider Soft Selling
Most people find capital raising daunting and they don’t know where to start.
An easy way to start, is to soft sell through networking which is a sure-fire way to get your business out there and let other professionals in your field know about your brand.
Networking events are great opportunities to meet other people in your industry, learn tips and introduce your brand to the right people.
The right soft-sell pitch can lead you to a deal with investors you otherwise would not have had.
- Find a Foundational or cornerstone investor
The best strategy for getting investment is to focus on finding one investor.
Create an avatar of your idea investor and become obsessive about who they are and what they do. Then go find them.
Once you find that person who can help you open doors and be a reference to you, the capital raising moves along much easier
Here is to your fund success!
Dolly Brtan
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DISCLAIMER: – All written content on this site is for educational and information purposes only. Opinions expressed herein are solely those of the author, unless otherwise specifically cited. All statements reflect the author’s judgment as of the publication date and are subject to change. The information contained herein does not include personalized investment advice, nor should it be construed as investment, legal, or tax advice. All ideas and information provided should be discussed with a professional advisor, certified accountant, or practicing lawyer before implementation. The ideas and information presented here is also not an offer to buy or sell securities nor a solicitation of any offers to buy or sell the securities mentioned herein.