Investment pitches can be among the most exciting, transformative – and utterly nerve-wracking events in your business life. Get them right and you can unlock an extraordinary new phase in your business’s development, with not just money but also skills, experience and invaluable networking flowing into your organisation. Get them wrong and – well. You know the rest.
How, then, should you prepare for an investment pitch? What are the key areas you need to cover? What are the elements that make a pitch for IoT businesses different from those in other sectors? How can you ready yourself for the big day itself?
The planning: What do you need to cover?
First, the basics. What areas does a typical investment pitch cover?
The core of your pitch needs to get across what your business does and why it is unique. So, begin there. You need to be able to summarise your proposition in a concise yet compelling way, and this needs to be clear from the opening of your pitch.
Next, think about your market. After all, without customers there is no growth and no opportunity for your (proposed) investors. You need to make it abundantly clear that you understand who your customers are, why they need your product and service, and how you will attract them. You also need to demonstrate that these target customers can deliver a strong return on investment for your business – that there are plenty of them, and ideally that they are a growing up.
This brings us onto financials. Having a clear and comprehensive understanding of your business’s financials is critical. It builds confidence in your business, and in you as a manager of that business. It paints a clear path to revenue for the investors. You need to demonstrate not only your performance to date (if applicable) and your projects for the future but should also familiarise yourself with more granular details such as the cost of materials or development and the cost to your customers. These will not necessarily go into your core pitch – it is important, as we shall show, to be concise – but you need to be prepared to discuss them. And of course, a critical element of the financial side of your pitch is what you are seeking from the investors. How will their investment be used, and what return should they expect?
And this brings us to the exit strategy. What is your goal? An IPO? An acquisition? Licensing? Simply talking about sales revenue or even a particular valuation for your business is not good enough – you need to demonstrate an attractive exit package for the investors.
And a final crucial must-have – don’t make any of this take too long. Often a timing guide will be provided if you have an organised meeting – take this seriously and don’t overrun. Investors are busy people with plenty of pitches to see and the last thing you want to be is boring!
The enhancement: How can you make your pitch stand out?
So those are the core planning points. But the softer sides of preparing an investment pitch can actually be what makes yours stand out above many others.
Generally speaking, warm introductions are much better than cold – so network hard amongst fellow entrepreneurs, portfolio company founders and angel investors so you are starting from the best foundation.
Do as much background research on the investors as possible. You should have a very clear understanding of what they like, what motivates them and who else they have invested in. This is the foundation for building a relationship – which is, of course, what a pitch for investment is all about.
Next, think about storytelling. There is a world of difference between a staid presentation which simply trawls through a series of slides, and a presentation which has been built around a narrative. The latter is easier to follow, more engaging and more memorable. Spreadsheets, valuations and numbers can rapidly get boring – yes you may well need to include them, but why not as appendices at the end? The human element is often a great way of building more of a story around your pitch – do you have a back story that could help convince the investors in your favour? Does one of your customers? Demonstrations can also work well, depending on your product or service.
Finally, don’t forget wild enthusiasm! With all of these different things to think about – and a healthy helping of nerves – it can be easy to forget about an enthusiastic demeanour and really conveying your passion for your business. But it is essential – it gives your pitch energy, and makes both you and the business seem more investable.
The nuances of IoT investment pitches
At this stage, let’s take a closer look at the nuances of IoT investment pitches, which can carry baggage – and opportunities – that other pitches do not.
IoT business are, either implicitly or explicitly, doing a number of things which can both excite investors and confuse them. You need to think about these factors from the outset, so that you can steer the investors around potential roadblocks and cover off any concerns ideally or questions without even being asked.
What kind of things are we talking about? Examples include:
- Creating new channels of communication between departments, organisations or different stakeholders, which can present ethical dilemmas or be difficult to understanding.
- Collecting data which previously went untapped – or even generating whole new forms of data. Again, there are likely to be ethical and/or logistic implications.
- There may be a lack of clarity around the true value and possibilities of the data you are going to generate, particularly if your business is at a very early stage.
- Security is a massive consideration, with huge amounts of data being transmitted and an array of new endpoint devices being created.
- The IoT is fundamentally an ecosystem, requiring lots of different organisations to work together, collaborating and sharing ideas and interoperability. Have you thought about this? What are your plans?
The upshot of all this is that you need to meet the challenges of the IoT head-on. You need to demonstrate that you understand the potential pitfalls of the IoT, and have worked out how your business will deal with them.
Conversely, you also need to show that you understand the unique opportunities of the IoT, and why investors choose to place their money in the sector at all. It can be helpful to think through the common motivations for new IoT products and services, so that you can clearly explain where you fit. This might cover areas such as:
- Adding new functionality to an existing product, such as automating a previously manual activity or providing an automatic alert for something that previously required a physical check.
- Releasing products more quickly, or offering automatic upgrades and patches over the internet.
- Integrating products more effectively with others.
- Moving to a licensing style revenue model rather than upfront purchases.
- Giving customers automated feedback on how they are using a product, so they can optimise their behaviour.
- Offering all-new services, such as alerting customers to better ways of using their products.
- Offering all-new products to market – the big one!
Often an afterthought, but utterly critical to the success or otherwise of an IoT investment pitch is how you prepare on a personal level.
The starting point, of course, is practice. Practice your pitch over and over again – and then practice it again. Your pacing is particularly important, given the tight timescales involve. If public speaking or presenting is something you struggle with, remember that this is a common fear for many people – and there are myriad coaches and trainers out there to help.
Don’t neglect personal presentation – though this doesn’t need to mean a grey suit. Dress smartly and respectfully but in keeping with both the investors you are meeting and your own business. And don’t be late!
For further advice on preparing an investment pitch for Tern PLC or if you'd like to pitch to us then get in touch.