Are You Ready to Pitch Your Business Idea to a Venture Capitalist?

At some stage in your entrepreneurial process, you’ll likely start approaching venture capitalists. These people act as business partners and invest in your business with the expectation of receiving hefty returns as you become more successful.

Far too often though, overeager entrepreneurs rush to schedule meetings with venture capitalists, not realizing what those potential investors will ask of them and expect. Although there are some variations, most venture capitalists want to feel assured that several things exist.

photo credit: RISE / Flickr

A Big Market for Your Product or Service

One thing that’s common among venture capitalists is they want to feel confident that people will genuinely want the product or service you offer. Remember, your success and the profits earned by the venture capitalist are linked.

You must be able to demonstrate that your target audience is ready and waiting for whatever you’re able to provide. It’s even better if you have already made a dent in the market by making people excited about your brand, product, or service.

A True Passion for What You Sell

Think of the last time you talked to a friend or relative who was extremely enthusiastic about a new TV show or restaurant. There’s a good chance that after talking to the person, you were firmly on board with wanting to tune into the program or make a dinner reservation at the new place.

Having an idea to pitch to the entrepreneur is crucial, but it’s also essential to show you’re genuinely excited about what you’re pitching and believe in its future success. It may be helpful to walk into a pitch bearing product demos and snazzy marketing materials, but if the investors don’t see that you’re willing to stand behind the product, they probably won’t want to give it support either.

Something That Is Unique

Venture capitalists also want to see evidence that you are doing things differently than other companies and solo entrepreneurs already in the market. There are several ways you could show that, including drawing attention to the fact that the price of your product is less than the norm (making it an appealing, discounted offering) or more (causing people to view it as an item that appeals to an upscale audience).

You might also discuss how your product fits into a niche market and is completely unlike what’s currently available. Sometimes, the uniqueness factor relates to how you make the product or the supplies used for it. Perhaps your manufacturing process is up to five times more efficient than the existing methods or you use uncommon materials, such as a sustainable material that is kind to the planet and provides excellent durability.

Keep in mind that there is no need to only have one thing that differentiates you from others. In fact, the more differentiators that you possess, the better.

A Problem You Can Solve

People who are experts about startup investing say the most important part of a pitch presentation is answering the question of why a product or service matters to the world.

Think of the problems you’d run into by pitching an item that a driver uses in a car if you don’t own an automobile, hate driving, and do not even have a driver’s license.

When pitching to a venture capitalist, be ready to describe why the thing you’re promoting can solve a clear and existing issue. In other words, articulate a well-crafted response to the “Why does it matter?” question. It’s ideal if you can speak to how you have personally struggled with something and know that your product helps resolve the obstacle you faced.

A Willingness to Collaborate

Never forget that a venture capitalist is not just a source of funds. That person may be your business partner someday. That’s a reality that Chris Sacca was well aware of when he founded Lowercase Capital.

When investing in a startup project, Sacca wants to work side by side with a dedicated founding team that is in control of its own destiny. Although Sacca leads a very busy life, the people who have benefitted from his advice say Sacca has empowered them to succeed.

It’s misguided to walk into a pitch session with the idea that a venture capitalist will stay firmly in the background. Although you should have a firm understanding of where you want the business to go, make sure to also be open to input.

Sacca has years of experience working with numerous startups and he is consistently willing to share what he knows with the people who want to hear it. The more you listen to people with experience, the easier it’ll be to apply what you learn to your own project.

These are not the only things a venture capitalist wants to see when evaluating you during a pitch. However, they are some of the foundational characteristics. If you do not display them yet, now may not be the right time to start meeting with future investors and showing them you can offer a fruitful business relationship.

Ivan Widjaya :Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.