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Accessing Finance in Jordan
The first most important step in accessing funding for most entrepreneurs is their pitch to investors. A pitch shows potential investors an entrepreneur’s idea, its potential, and alignment with investors’ priorities. It also shows an entrepreneur’s passion, character, and capacity to meet the demands of a startup. It can, and usually does, make all the difference—an excellent pitch may make up for some weaknesses with a startup, but a poor pitch will almost surely kill a promising startup’s chances with an investor.
By the time entrepreneurs pitch, just before investors begin contemplating investing in a startup, investors will want to see the following:
Minimum Viable Product (MVP): Investors will want to see strong evidence of an MVP or working prototype that you can showcase during a pitch. It needs to be sufficiently developed and tested so that your demo proceeds without any glitches.
Right Team: Investors will want to see that the startup’s team has the right mix of talent, experience, knowledge, integrity, passion, and willpower to succeed. They will also want to see that a startup has the right number of team members. One founder trying to do it all may show investors that such an individual cannot manage themselves or work with other people, while a team with too many members at an early stage can show that a startup does not understand the importance of bootstrapping and may be careless in spending investor money, appointing employees unnecessarily.
Market Knowledge and Traction: You will need to illustrate advanced knowledge of the market and a track record to show that your product or service is validated and has potential. While you may not need to have the same customer base as a mature company, you will need to show evidence of a sufficient number of retained users, whom you have also succeeded in upselling or cross-selling to.
You’ve done your homework: Investors will want to know that you have done the required research on them prior to approaching them. You will need to know what companies similar to yours the investor has invested in and that those companies are not direct competitors. Investors need to know why, apart from financial reasons, an entrepreneur has approached them specifically. This will show that you know them well and are aware of the value they can bring to you and you can bring to them.
Once you are confident you can address the above, you can approach investors and pitch. During pitching, you should take note of the following:
1. Tell Your Story
While investors are interested in your idea and its potential, they want to make sure you have the passion and are aligned with your product or service. Investors can figure out the current or potential profitability of a startup from spreadsheets and business plans, but they cannot gauge an entrepreneur’s dedication, work ethic, and capability to ensure a startup’s success, unless they see those traits first-hand. Entrepreneurs that tell their stories can make themselves and their startups stand out and convince potential investors that they have what it takes to succeed. If you don’t show that you have the passion for your product or service, it’s an alarm bell that something is not quite right, and one that investors will pay attention to.
2. Less Is More
While pitching times differ according to the setting, the stage a startup is at, and investors requirements or preferences, your pitch time should not exceed 10 minutes. On demo days when incubators and accelerators have anywhere from 10 to 30 companies pitching, presentations typically do not exceed three minutes.
The typical seasoned investor has seen hundreds to thousands of pitches. Do not spend too much time on trivial issues, drowning out the most important parts of your pitch with unnecessary information. Instead focus only on the most critical aspects of your startup, including the problem it is trying to solve, its potential, traction achieved, and the value your team brings
3. Be Clear and Precise
Investors value their time and want to see that you also value your time and theirs—if you respect your and their time, it is further assurance that you will also respect their money and know what to focus on in your journey. Be very clear and straightforward about what your product or service does, what its potential is, and what you are asking for. Do not assume that investors will understand what you perceive to be the simple aspects of your business. Do not try to impress them with acronyms and advanced technical terms. Investors may see this as an attempt to cover up inadequacies in your product or service.
4. Impress
First impressions count and your pitch is often really the only chance you’ll have with an investor—impress them! Make sure you highlight your strengths as an entrepreneur and as a startup.
At this stage it is really important that your product or prototype is functional, presentable, and generating traction in the market. Investors will need to see numbers to evaluate whether or not to invest. It is therefore crucial that you begin collecting such information as soon as your product begins testing or hits the market. It is critical that your numbers illustrate the potential for your startup to generate massive returns on investment, otherwise average returns are simply an opportunity cost for investors. Your pitch should, aside from showcasing your MVP, or prototype product or service, also detail its advantage over other competitors, your strategy to take your product to market, your revenue model, timelines and projections, and your ‘exit’ strategy (when you want to sell your share of the company and forego ownership). Investors focused on financial rather than on strategic or impact returns want to make as much money as they can as fast as possible—your pitch should show them how much money you can make them, the process you will follow, and the time period it will take. You should have done enough research on your audience to know what they like and dislike, the companies they have invested in, how much you can ask for, and what their personality is like, in order to know how to prepare your pitch.
While investors will want to invest in passionate, intelligent, and humble entrepreneurs who are dedicated to improving their product, they also want to make sure that entrepreneurs are tough enough to weather the storms that come with building a business.
5. Be Transparent
Being honest in financial dealings is paramount, and investors have seen enough pitches to suspect when an entrepreneur is hiding something or not telling the truth. There is no need to make past failings the highlight of your pitch, but likewise, you should not lie about them. If you feel your startup is not yet at the stage where you can convincingly ask for funding, then you should not pitch in the first place, and instead go back to the drawing board. Reputation is your currency as an entrepreneur and startup. If you destroy it with one investor, word can spread and destroy your chances everywhere. You will be working closely with many investors—if they feel that they cannot trust you, they will not give you their money.
6. Slide Deck
Every pitch needs to have a slide deck. This is a presentation that showcases an entrepreneur’s product, her or his business, and their promise. While slide decks will differ from investor to investor and entrepreneur to entrepreneur, there are sections most investors require when startups are pitching to them. As a general rule, your slide deck should be between 10 to 15 slides and should not exceed 20 slides.
And remember...
Practice Makes Perfect: Remember to rehearse your pitch dozens of times! As already mentioned, your pitch is often the only chance you will get with an investor. Make sure you rehearse until you cannot get it wrong! Practice pitching to friends, family, and your own team. Practice in front of the mirror and even record yourself on video. You will be surprised to find out how different your body language, vocabulary, and presentation skills may seem once you review the video.
Elevator Pitch: While you may be waiting for your meeting with an investor to pitch and showcase your product or service, you should always be prepared to pitch at a moment’s notice. You never know when you may meet a potential investor and if they may know about your startup and ask you to explain it for them. If you cannot explain your startup in 20 to 30 seconds, you may lose an investor right then and there. If you are prepared, your clear and brief pitch may get you the funding you are looking for.