Every successful business begins with a good idea. But an entrepreneur with a good idea needs financial resources to make his idea become a reality. In these ever more competitive business times, the first step towards realizing a good business idea is making a good pitch to potential investors.
Dr. Michael Edmondson, co-founder and president of the US-based biotech consultancy company, MEAPA, calls the current economic environment the “Creative Economy,” which he says is marked by “an accelerated information exchange rate involving new information mediums delivering more advertising messages about an ever growing number of products and services.”
In this new environment, investors are inundated by more and more new information every day, which makes it ever more difficult for them to decide what company to invest in. It is common for the typical investor to get thousands of proposals each year. Among these, a few hundreds would be read or looked at. The number of proposals that would be researched and considered would then be trimmed to around 40 to 50. In the end, projects that actually get funded would only be a handful.
If money were not an object, an entrepreneur could seek the help of a business consultant to beat these odds. But if he decides to go it alone, what should he do to make that perfect pitch?
When pitching a business proposal to potential investors, entrepreneurs should be able to show that they have done their homework. Many entrepreneurs, Edmondson notes, still make the mistake of relying solely on the product description to tell their story. “Simply believing your product is the best,” he says, “is not sufficient marketing.”
A second mistake, Edmondson adds, is that “entrepreneurs fail to view marketing as real work and often start the marketing process far too late in the product development lifecycle.”
Lastly, there is often a “disconnect” across business documents created by the entrepreneur, where there should exist a consistent and compelling story. For example, a marketing plan—which includes product positioning—should already anticipate advertising angle and placement.
Before pitching, therefore, the entrepreneur should have already formulated a marketing strategy that will help him realize the potentials of his product or service.
In their shoesMellissa Limcaoco, co-founder and president of the mobile content provider Entertainment Gateway Group (EGG), has scored many successes in getting investors for her business ideas. In making pitches, Limcaoco says, it is important to
put yourself in the shoes of your potential investors. Imagine it were you who were being asked for money, she adds, and ask yourself what are the things you want to hear from the person making the pitch.
From her own experience, Limcaoco shares that the three most important things to prepare when pitching are: 1) the bottom line, or how much profit the investor will receive and when, 2) a competitive analysis and what makes your idea different from others, and 3) your and your associates’ credentials, because investors should be able to trust that you will make it work and you are not out to defraud them.
Antonio Mateo, inventor and head of Amecos Innovations, Inc., a company that develops new ideas for home and personal use, says that research and development usually requires a lot of time and funding. But “having a prototype is the best way to appreciate the invention,” he says. Though he has never tried getting funds from venture capitalists or angel investors, Mateo says it’s very important for the inventor or the entrepreneur to assure the investor of the product’s unique selling point and that it will not fall victim to copycats.
Making the pitch
After completing the plans, the entrepreneur should be ready to pitch to potential investors. He has to prepare a good presentation.
When asked to describe her job, Maoi Arroyo, founder and CEO of Hybridigm Consulting, Inc., which is the first biotechnology consultancy firm in the country, said, “I’m a nerd translator.” Her clients are mostly scientists, inventors and academics; she helps them translate their products or inventions into terms comprehensible and exciting to potential investors. In short, she makes the pitch on behalf of her clients.
An example of a bad pitch, Ms. Arroyo recounts, happened during one particular meeting where her client presented his product—a new sewage treatment system, complete with 200 slides of pure scientific verbiage—over dinner.
A no-nonsense presentation, says Arroyo, should follow the “10-20-30 Rule.” This means a presentation conducted with ten slides within 20 minutes, and all text with font size of 30. A presentation, she adds, “should be long enough to cover all important parts, but short enough to leave them wanting more.”
“A ladder of yeses”—this is how Arroyo describes an effective 10-slide presentation. To her, starting it with the company profile is a big no-no because it may just bore the audience. Instead, she suggests the following presentation scheme:
- Slide 1 should present a problem which the entrepreneur purports to solve.
- Slide 2 should contain the proposed solution to the problem.
- Slide 3 should outline the presenter's market research and data, which should answer this important question in the minds of the audience: Why should I care?
- Slide 4 should present the entrepreneur’s plans on how he will reach his audience.
- Slide 5 and the rest of the slides should lay out the project's financials: how much money the investor should put in, how much he will get in return over what period. These numbers should demonstrate that there is an excellent opportunity for the audience to share in the success of the business.
- The last slide should simply contain the entrepreneur’s contact details. Parties interested to know more about the business will follow up and ask for more detailed documents.
Presentation game plan
When doing the pitch, you must show your potential investors that you have a definite plan. Be ready not only with a product description, but also with a specific business objective and a marketing strategy.
Keep your presentation short. Cover important points, but don’t get into so many little details.
Don’t read off the slides (your audience can read, too). Put important facts and figures on slides but elaborate verbally. Animate your body, not your slides.
Lastly, learn from your audience’s questions. This will help you refine your next presentation.
Contact details:
Dr. Michael Edmondson,
President, MEAPA
www.meapa.com
Maoi Arroyo,
CEO, Hybridigm Consulting, Inc.,
www.hybridigm-consulting.com
MEAPA, LLC.
The Bioscience Commercialization Roadmap. January 2006.
Sagana 100 Philippines Inc.
Telephone: (02) 922.5683
Telefax: (02) 928.9791
Mobile: 0917.534.2378
