You are pitching because you want support. It might be financial support, but you may also need non-financial support.
It is important to know exactly what you want and how much you want.
1. How much do you want?
Knowing how much you want shows that you have done your homework into the business’s financial needs.
Avoid guessing how much you want. Get quotations of amounts you want.
“I’m looking for R600,000 investment to grow the business as the demand for our products has more than doubled.”
2. How much have you invested of own money?
Investing some of your personal money into the business shows skin the game. It shows commitment.
“I managed to save R10,000 of my own money. I have also invested time doing research into the business. I paid R5,000 for a website and travel costs for research was R5,000. The total amount of my own funds invested in the business is R20,000.
3. Any funds raised so far? How much?
Consider raising some funds from the 3 FFF’s [Family, Friends and Fools]
“I have managed to secure funding of R50,000 from my father and another R30,000 from my friends who believe that this idea has potential.”
4. How many, and what type of investor are you looking for?
Investors can give you a loan, or take equity stake in your business, or both. Government support often gives out business grants.
Equity investor is like getting married, you are tight each other for a long time. A loan is like an engagement, a grant is no attachments.
“I’m looking to give away 10% equity in return for your investment. The business is still fairly new and I will need a partner who is patient to let the business grow.”
5. What expectations from your investors; network, expertise?
It is important to consider looking beyond just financial support, consider non-financial support such as mentorship, access to markets, accessing the investor’s networks etc.
“Over and above your investment, I would really appreciate mentorship from you especially regarding how I will grow my business overseas.”
6. How will you use the investment?
Give us an itemised breakdown of how you are going to spend the money line by line.
“With your investment I will use it to buy Machine X which costs R400,000. I will rent an additional warehouse which will cost R50,000. I will also get ISO9000 certified which is will cost R50,000. Here are the quotations for what I’m looking for, the total cost is R500,000.”
7. What milestones will you reach with the money?
Give us the before/after situation. Before your investment, I am here, after your investment I will there.
“As a result of your investment I will be able to buy an additional machine, which will enable the business to meet more orders from clients, we will employ 5 additional employees, and this will increase turnover by over 50%.”
Before investors can show you the money, you must show them that you have done your financial homework.