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A successful pitch has six elements, according to the business angel, Christina Forsgård, who has supported entrepreneurs in various ways. Picture: Peter Forsgård
Would you like bunch of tips for growing your business? The business angel Christina Forsgård, who has supported entrepreneurs in various ways, guides them who strive for growth to the secrets of pitching.
A goal of growth is in the DNA of most companies. Describing a realistic growth goal is essential when the growth requires external funding, e.g., for scaling the business. Investors must be able to believe in the possibilities of the growth targeting investment so that they will have the patience to wait for the business to become profitable.
The first official capital funding stage is called seed funding, where external “smart” money is searched to grow the company. In this stage, searching for experienced angel investors, who could and would want to bring their own business expertise to the company along with their capital funding, usually takes place.
One of such angel investors is Christina Forsgård. She has coached hundreds of startup teams in growth accelerators, like Startup Sauna, Vertical, xEdu and Boost Turku events, in the Rocket Sales program by Startup Wise Guys in Estonia and Labs of Latvia events. You could have met her in countless startup pitching events where she has worked as a judge. In addition, Forsgård works as an angel investor in various startups as an advisor and board member.
According to Forsgård, a successful pitch has six elements.
You have a gathered a capable team, the timing supports your idea, and you have received a chance to present your winning package to a group of early-stage investors. In other words: you are about to pitch your idea to get seed funding.
It would be best to keep this recipe in mind:
Your startup’s chances of becoming successful rely significantly on timing and how your idea responds to the current market. So, you need to know that world and be able to describe it and its problems convincingly during the pitch.
“You must know the world and industry surrounding your idea so well that you know if the timing is right for it. Very rarely do the investors want to wait long for the perfect timing”, Forsgård says.
2. The team believes in the big story
Investors are human beings, and people most of all believe in other people. Therefore, when the time comes to go before the investor candidates, it is significant who gives the pitch. A group that ultimately believes in their plan is the best one to explain the idea and why the company exists.
“I’m interested in people. A good idea is not enough, but the pitcher must sell themselves, and the team’s knowledge, skill and will. The point is to make the investors want to invest in this expert team and to show that it can also accept guidance. We also want to see that the team has the resilience to withstand difficult times”, Forsgård tips.
A successful team can paint a realistic picture of the world they operate in and present the exciting opportunities it offers.
“You must be able to describe a world where the wheel you invented will solve a recognised problem without significant demands for changes to the structures, processes or logistics chains, to which affecting would take decades and cost a fortune”, Forsgård says.
3. The winning idea
Now it’s time to present the idea. It is good to understand that some investors might know about the industry, and their specific questions or notes might get others to question the business idea’s success potential.
“It is important to take care of previous stages well before this one. Then, if the timing and team happen to hit the mark, you have partly de-armed the investors from shooting the idea down. During the pitch, one of the team members could be an investor themself, who would know the industry very well. It would help get the uncertain investors on board”, Forsgård tips.
4. Investing in the business is profitable
Forsgård has received many pitches, and her view is that the most significant thing today in the business model is how to make money with the team’s idea.
It is good to be prepared to take guidance in this stage. An investor interested in the team and idea might say that this particular business model does not work, but if we change it to “this and this direction”, I’m in.
“Business model have risen to be innovations, in which investing is profitable. Therefore, it is smart to bring a person knowledgeable of business models to the pitch, if possible”, Forsgård emphasises. “If you can show how new technologies enable new and more efficient ways to do business in familiar industries, you will surely get attention”.
5. What can you get with the money?
Finally, we arrive at the funding stage. You need to show now what the investor’s money can accomplish, e.g., during the first year, without getting overly optimistic.
“The business must be scalable in all growth stages with the resources available so it will be attractive in the eyes of the investor. You can surely get funding if everything mentioned before is in order”, Forsgård reminds.
6. Keep the IPR rights and expertise in your hands
The main thing in creating value and sustainable growth is that the ownership of the company’s fundamental functions belongs to the owners.
“If immaterial rights or the central R&D are outside of the company, it’s more difficult to get funding for the idea”, Forsgård says
During a pitch, it is essential to point out that along with the IPR rights, the team also possesses vital know-how. Otherwise, according to Forsgård, ensuring the accumulation of the invested capital will be tough. The know-how can be found in people and communities.
Make promises and keep them
If you got seed funding during the pitching stage, it is crucial to keep the investors aware at all times of the plan and goals and when you’re reaching them.
“No one tolerates goalless wandering. Commitment and excitement will fade quickly. Promises made and kept to the investors are the glue which keeps the investors on board and as advocates. Fearing the next funding round is unnecessary. The money will come if the current investors still believe in the team”, Forsgård emphasises.
This article is part of our story series of the success stories of startup entrepreneurs (in Finnish).
Uuden työn edelläkävijä, joka inspiroituu digitalisaatiosta ja haluaa toteuttaa sen luomia mahdollisuuksia yhdessä asiakkaiden kanssa. As a forerunner in new ways of working, DNA Business gets inspiration from digitalization and wants to realize its potential together with customers.