What else do I need to do to structure my pitch?

This is the second part of my blog about structuring your first pitch to investors. Click here to read Part 1. 

Now that you’ve set the scene you go into product details.

POINT 5: THE TECHNOLOGY/PRODUCT

Focus on the benefits that your technology provides to customers. I have found that this technique works really well: “Our technology includes (insert feature) and that means our customers will (insert benefit to the customer). As an example of how this works (give example).”

You should include three main benefits of your technology/product. Remember the law of lists (three is the magic number when it comes to lists). Show that your product has three major benefits for the company/person who purchases it.

You can give a VERY TIGHT description of the special aspects of your technology. This is not due diligence, so you don’t need to prove that it works, you can do that at the next meeting. Simply highlight what it is that you can do that the competitors cannot do.

Do not, on any account, give a demonstration of your technology. I have NEVER seen an effective computer demo during a short pitch. Why? Because these demonstrations get bogged down in detail and can get very boring, very quickly.  You can do the demo at the second meeting.

POINT 6: MARKET RESEARCH

OK, so you’ve got this product, it’s like a bunch of other products only better. That’s great. How do you know it will sell?

Even if your technology or service is currently selling in the marketplace, it’s important that you continue your market research for the changes or improvements you plan to make to the business with the investors money.  When you present your market research, you’ve got to outline three things:

•·        Your methodology (surveys, library research, focus groups, etc).

•·        Your results.

•·        The implications of those results for your business.

For example:

Let’s say you’ve invented a running shoe with a sole made of a hi tech synthetic material that interacts with wet pavement to provide a vastly improved grip in wet conditions. Impressive. Your market research might look something like the following.

Let’s say your target market is “runners in the cities of the world who are dedicated enough to run in the rain, and want to avoid potential injuries due to slipping”.

You need to find out how many of these people are out there to be sold to, so you’ve gone to runners’ associations in 10 major US cities and asked them how many members they have.

You’ve also got permission to telephone survey their members, and then administered a professionally written survey that assessed the potential market for a specialised wet-weather running shoe.

Turns out, there are quite a few people who run in the rain. It also turns out that many of them expressed that they do fear injuries when they run in wet conditions. Now we’re getting somewhere.

In this case, your methodology would be the administering of telephone surveys to the members of runners’ organisations. Your results might be the number of total members of the organisation versus the number of members who (a) run in wet conditions and (b) fear injury when running in these conditions.

The implications of this research might be that there is a substantial market share available to the company that can create a running shoe that addresses the fears of runners who frequently run in wet conditions.

You should have done additional research into the habits, tendencies and preferences of your target market. This is a good time to present that research to your potential investors. You will also need to cover any industry trends that will impact on your projections.

You could spend 15 minutes just on market research but, again, select the points that will have the most positive impact on your potential investors.

POINT 7: MARKETING

You need to cover some/all of these points in this point:

•·        Your niche.

•·        Your customers.

•·        How you will generate revenue.

•·        Basic marketing strategy.

Talk about how you will generate revenue. This includes your marketing strategy and sales projections. You know your product, you know who you want to sell it to, so how are you going to do it?

For our example of the wet-weather running shoe, the first issue you need to decide is: Are you promoting to the runners or to shoe manufacturers?

You could set up a manufacturing operation and put a new shoe on to the market or you may sell licences to already established brands. Then you have an option to go exclusive to one brand or to go non-exclusive. These are all strategic options that you need to discuss before you present to investors. These are some elements of your business model.

Whether you become a manufacturer or go to an established brand, your technology will need to be promoted. If you go with an established brand you will need some basic understanding of their promotion strategy and how this can be used to sell your shoes.

Your marketing strategy must be based on the research you’ve done into the habits and preferences of your target market, the alliance partners you may engage and other aspects of your market and industry.

From your marketing strategy, you need to discuss how you will generate revenue. You’ve got to have your financial plan in place to decide how much you will charge, how much of that price that will go to production, marketing, packaging and other overhead, and finally, how much of it will be profit to you and your investors.

Next week I’ll cover the last part of structuring your first pitch.

Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site www.pitchingtoinvestors.com with tools and tips about how to develop killer presentations to raise capital.

To read more Gail Geronimos expert advice, click here.

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