How to Sell a Business Idea to an Investor: 10 Actionable Steps

Did you know that only 1% of startups secure funding from investors? As a startup founder, you’re faced with a critical decision: should you bootstrap your venture or seek external investment?

More often than not, the need for investment becomes apparent in the early stages of a project, particularly when you’re looking to create your first product version or kickstart your sales. The difference between success and failure often lies in the pitch. Imagine walking into a room of potential investors and leaving with the capital you need to bring your business ideas to life.

In this comprehensive guide, we’ll walk you through the intricate process of attracting investors and effectively selling your business idea. Let’s dive in!

How to find potential investors for your business idea?

We've covered a complete guide in the article "9 Ways To Find Investors for Startup to Pitch To", so you might want to check it out first. Before diving into the specifics, it's essential to understand the various types of investors and funding options available to startups:

How to find Business Angels?

Business angels are private investors with their own business who provide financial support and valuable expertise and guidance. They often become mentors to the startups they invest in, sharing their experience and industry connections. In exchange for their support, business angels typically receive an equity stake in the company.

Research local angel investor networks and attend startup events where you might meet potential angels.

How to find Accelerators?

Accelerators specialize in nurturing and developing startups, often providing a combination of funding, mentorship, and resources. While some accelerators focus on early-stage startups, others cater to more established businesses looking to scale rapidly.

lIdentify accelerators that align with your industry and stage of development. Prepare applications well in advance of their deadlines.

How to find Venture Capitalists (VCs)?

Venture capital (VC) firms invest in high-potential startups or growing businesses, typically seeking innovative, technologically advanced, and scalable projects. VC funding often comes with higher expectations for growth and return on investment. Research VC firms that have a history of investing in your industry. Study their portfolio companies to understand what they look for in investments.

Crowdfunding for Startups

While not mentioned in the original article, crowdfunding has become an increasingly popular option for startups. Platforms like Kickstarter and Indiegogo allow entrepreneurs to raise funds directly from the public, often in exchange for early access to products or other perks. Consider whether your product or service is suitable for crowdfunding. If so, start planning your campaign, including rewards and marketing strategies.

How to find Corporate Investors

Large companies sometimes invest in startups seeking innovative solutions that align with their strategic goals. Identify corporations in your industry that have venture branches or innovation programs. Research their investment criteria and reach out to them with your product.

What to include in your pitch deck?

An ideal pitch deck should answer several essential questions for a potential investor:

• Who are you, and what do you do?

  • You need to briefly introduce yourself, your team and the problem you are trying to solve.

• What is your idea or business plan?

  • You need to be able to explain the essence of your business idea in simple words. Don't overcomplicate it, build interest. You can use tools like hotball.ai when creating a business plan. Hotball.ai can help you structure your business model and highlight missing details.

• How big is your target market?

  • A market analysis is necessary to confirm the viability of a startup, identify potential markets to enter, test demand for new products or services, and determine the best product placement strategy.

• How and with whom will you implement the project?

  • You must show a detailed action plan and the project's development level. Do you have a team? How professional is it?

• How much money do you need, and what is the payback period?

  • Figures should be estimates, not approximate, and rounded up.

• Why are you sure that everything will work out?

  • The investor needs to understand that you have considered all the risks and details of the project.

If you want to learn how to make a good pitch deck, you can read about it in our article "How to make a pitch deck: A 12-step complete guide for founders"

What kind of pitch deck you need to prepare?

The main goal of the pitch deck is not to get funding right away, but to get to the next meeting. A good, informative pitch deck is the first rung on the ladder. You must present investors with an idea that interests them enough that they want to discuss it further. There are two main types of pitch decks you should prepare:

1. A short pitch deck contains key business information condensed into 12-15 slides. This type is used as a visual aid during face-to-face presentations with investors or when you have very limited time to pitch. 

2. Second pitch deck you need to have should provide a more extensive pitch deck provides a detailed and thorough startup description. Unlike the short presentation, this deck must more detailed sections, as interested investors will read the entire document. For this pitch deck make sure to include all necessary business information along with numbers, goals, vision, researches and etc. This detailed pitch deck is usually emailed directly to venture capitalists, business angels, and other potential investors after initial pitch.

Make sure to have both pitch decks ready before pitching to investors. Hotball.ai helps you to create a good pitch deck and simulate investor questions you might get. Hotball.ai will analyse your pitch deck, business model, and any other file you provide to identify weak points, gives unbiased opinion and suggestions on how to solve it.

How do you sell yourself to an investor?

Think like an investor

Review your pitch from an investor's perspective. Identify potential concerns and address them in your pitch. Remember that the investor is investing free capital to make a profit later. Calculate when the project can become self-sustaining and bring the first profit. Include the results of these calculations in a presentation you show to a potential investor.

Select financing type

If you want to make an investor a co-owner of the business, we are talking about equity participation - he will have a voice in decision-making and take part in the company's profits. If you need funds you plan to repay over time, we are talking about debt financing. Decide whether you're seeking equity investment or debt financing. This will impact how you structure your pitch and what you offer in return.

Showcase your track record

An investor will be more willing to give money to a project that has team with industry knowledge, industry experience or success cases. Highlight your team's strengths and how they contribute to the project's success. If you're seeking funding to expand your team, demonstrate what you've achieved with limited resources and how additional funding will accelerate growth.

Research potential investors and make a list

Research and create a list of investors interested in your business sector. It is crucial to research potential investors to understand their expectations and interests to tailor a compelling pitch and find an investor with the right expertise, knowledge and network. Leverage your own network for introductions, linkedin tools, events or reach out through direct channels if necessary.

Wrap your idea into a pitch deck and make it stand out

Most likely you won't have much time to present your idea to investors, so make your pitch-deck stick. It is a bad idea to make it very long as usual pitch lasts around 10 to 15 minutes max and adding to much information will simple ruin it.
What you want to do instead is make a great story around the problem, tell why existing products can't solve it the way your product and .

Get some accessory and think how you can play it out in your pitch that will make you stand out from the crowd. Someone with a gong pitching a sales software will be hard to forget.

Create a financial model

Showcasing your financial projections including sales plan, pricing strategy, hiring and equipment purchases straightens your product idea in the eyes of investors. This demonstrates your understanding of the business's financial aspects, and it is an important element of any pitch.

Seek expert advise

Seek advice from other entrepreneurs and founders who've pitched before. Ask for their pitch decks and get an opinion on yours. Their experience can help you avoid some mistakes when preparing for an investor pitch.

Another good idea is to hire a pitch coach. He will help structure your pitch deck and amplify your presentation skills. The coach will give personal recommendations to easily deal with timing, storytelling, and questions from the audience. Experienced pitch coaches often understand what specific investors are looking for, tailoring your pitch to meet these expectations.

Be ready for questions

After delivering your pitch, be ready for questions from investors. They might inquire about your market size, customer acquisition strategies, revenue streams, growth plans, exit strategies, and more. Anticipate these questions and prepare thorough, honest answers. If you don't know an answer, admit it and promise to follow up later. Avoid making up or exaggerating information, as this could harm your credibility. 

Build relationships

The pitch is just the beginning. Follow up with your investors and inform them about your progress and milestones. Build strong relationships by demonstrating trustworthiness, reliability, and professionalism. Send thank-you notes, newsletters, reports, and event invitations. Maintain clear, concise, and consistent communication. Remember, investors can be valuable partners and mentors, not just funding sources.

Be prepared to work long hours

Finding and attracting investors is grueling work that can take several months or even years. Believe in your project and continue working even if you got 10 rejections in a row. It takes a lot of time and effort to secure the funding especially if it is your first venture.

Wrapping up

Securing funding for your startup can be challenging, but with the proper preparation and strategy, it is entirely achievable. Consider the success stories of startups like Airbnb and Dropbox, which started with clear, compelling pitches that effectively communicated their unique value propositions. Airbnb's founders famously used a simple yet powerful pitch deck to secure initial funding, and Dropbox's demo video became a viral sensation that attracted significant investor interest. These examples show that you can turn your innovative ideas into thriving businesses with the right approach.

You can position your startup for success by following the actionable steps outlined in this guide—developing a solid business plan, understanding your market, building a strong team, creating compelling pitch decks, and more. Stay persistent, be prepared to iterate on your pitch, and never underestimate the power of a well-articulated vision.