Prep

Funding 101: Prep

 

How to Pitch Angel Investors

It’s not that hard to figure out how to pitch angel investors properly. Most of it comes down to common sense and just treating angel investors the way you would want to be treated.

Despite what you may think, if you want to pitch angel investors you’re not expected to go through some elaborate sales routine. It’s a matter of presenting great information in a compelling way, but doing so honestly and with compassion.

Start with the Elevator Pitch

The first thing you’re going to send to angel investors is your elevator pitch. Your elevator pitch isn’t a sales pitch. It’s a short, well-crafted explanation of the problem you solve, how you solve it, and how big of a market there is for that solution. That’s it. You don’t need to “sell” the angel investor in the introduction. Your opportunity should speak for itself.

We’ve spent a lot of time and effort putting together “How to Create the Perfect Email Pitch” which you can review here. This will include your elevator pitch but basically makes sure you cover all the high points in your email that will get an angel investor’s attention right out of the gates. It also kind of make sure you don’t come across like a cheeseball (hey, it happens to the best of us.)

Have your Pitch Profile Ready

These days just about everything is done through email, which means just about everything is also available on the Web.

Sending your elevator pitch along with a 20 megabyte PDF document is a sure fire way to never even make it past an investor’s spam filters. Instead, you should send a link to your Pitch Profile, which is an online profile that explains a little bit about your deal and provides a way for the investor request more information.

You can create a Pitch Profile for free on Startups.co or Bizplan.com. It only takes a little while and it will be a much better way to provide a reference back to your company profile than messing with attachments.

Your First Response

When and if the angel investor responds to your email, you’ll either get a short “no” or a request for more information.

Most angels will request either an Executive Summary or a Pitch Deck which are pretty similar (we’ll explain in a minute). The angel investor isn’t interested in finding out as much information as possible about your deal at this point. In fact they are looking to find out as little information about your deal in order to determine whether or not they want to spend more time with you.

Don’t inundate the investor with every last piece of information you’ve ever collected for fear of them “not seeing everything”. They are likely reviewing a dozen other deals at the same time so they couldn’t review your tome of knowledge even if they wanted to (which again, they don’t). Simply let them know that more information is available upon request.

Executive Summary

The more traditional request from an investor is to ask for an Executive Summary. Over the past decade this has become less and less requested in favor of a Pitch Deck which is just a PowerPoint document of slides.

The Executive Summary is a 2 – 3 page synopsis of the business plan that covers things like the problem, solution, market size, competition, management team and financials. It is typically in narrative format and covers a paragraph or two about each section.

You can expect the angel investor is going to jump to the one section he’s most concerned about, read the couple paragraphs, and then maybe look a little deeper. He figures you’ll answer most of these questions in your pitch meeting, so he’s not going to spend too much time on your docs.

Pitch Deck

The other request you may more likely get is for a Pitch Deck. A Pitch Deck is essentially your business plan or executive summary spread across 10 – 20 slides in a PowerPoint document.

Investors like Pitch Decks because they force the entrepreneur to be brief, and hopefully use visuals instead of an endless list of bullet points. The Pitch Deck is your friend and most trusted ally in the angel investor pitch process. You’ll use it as your main collateral item to get meetings, it will be the focus point of your meetings, and it will be what investors peruse after your meetings.

The Pitch Meeting

Once the angel investor has reviewed your materials and determined they are interested in meeting you, you’ll obviously put together a time to go in for a pitch meeting.

Your pitch meeting is more about the investor liking you as a person than it is just pitching your idea. Take a little bit of time to try to establish some rapport. Investors will more often invest in an entrepreneur they like with an idea they have some reservations about than an idea they like an entrepreneur they think is a jerk.

During the pitch you’ll run through your pitch deck and answer questions. The goal isn’t to get to the end of the pitch deck in 60 minutes or less. The goal should be to find an aspect of the business that the investor actually cares about and zero in on that point. If the investor wants to spend 60 minutes talking about the first slide, don’t rush them. You don’t get points for presenting the 20th slide. Focus on the conversation.

The Goal of the Pitch Process

The goal of your first few meetings isn’t to “close” the angel investor, it’s to establish a relationship that will naturally lead to a close. The investor isn’t someone looking to buy a car that you have to provide a great deal to. Be yourself. Represent the opportunity and your passion for business. That is all you need to convince someone to do a deal.

The beauty of pitching an angel investor versus a larger organization like a venture capital firm is that you’ve typically only got one person to convince. If you can build this one relationship, you’re on the right path.