What investors look for in a pitch

Pitching is an integral part of the fundraising process. It is an opportunity to tell a story of your innovation that is captivating enough to invite a further conversation towards closing financing.

Your pitch should ideally be part of your fundraising deal room, in which you have information that you can easily share before and after a pitch, and at each stage of the fundraising process with an investor that shows interest. 

Mr Arthur Mukembo, Future Lab Studio Lead at Innovation Village, says it is prudent to have at least four versions of your pitch – an elevator pitch, a three minute, ten-minute, and follow-up deck that provides more depth so that you are prepared for most scenarios thrown at you.

Pitch flow
“A good pitch articulates the core problem you are addressing, unpacks why this problem is important, how frequently it occurs, why it is painful for your target customer segment and articulates how they are currently working around it, speaking to why the current state is broken,” he says. 

Against that context, the pitch should then delve into your proposed solution, articulating the most crucial gains it creates and the pains it relieves for the customer. 

The pitch should then proceed to discuss the size of the market opportunity, starting at the macro level – the total addressable market, breaking this down into the immediate segment of the market you are starting with – the serviceable obtainable market, why now and what unique insight or capability you have that positions you to win this opportunity.
 
The pitch should then ideally describe your product or service, clearly articulating what aspects of it deliver your solution for the customer and what benefits it unlocks. 

Mr Mukembo says this then formats a good juncture to unpack the economics of your idea – what is the business model, how are your unit economics organised to position you on a path to profitability, who else offers a similar product and/ or uses a similar business model and how are you differentiated against them? Are your differentiators defensible, if so, how? 

“It is also a good juncture to delve into how you intend to capture the market – your go-to-market strategy, and to discuss what traction you have gained so far – your traction. This context then typically sets you up well to speak to how much you are raising, in what deal structure, and crucially, to unpack what milestones it will position you to unlock,” he says.

Pitch highlights
Team skillset: Does your team have all the skills necessary to carry out the intended project? If you are trying to create a software application, do you have a team that will help you through the design process? 

“An investor will be put off if you must use some of the money they give you to hire staff rather than kick off the production cycle,” Mr Jun Shiyomitsu, the chief executive officer at AVODA Group says.

Team cohesion: Having all the skills is wonderful, but the investor will also look at how the team interacts. For instance, does the team leader rally those around him to work together? “Often, the team does the presentation while the rest are silent. 

However, cohesion means that all the team members have a role to play in the pitch presentation in a fluid manner,” Mr Shiyomitsu says.

Finances: Mr Shiyomitsu says most Ugandan entrepreneurs can tell a very compelling story about a need but fail to convince regarding revenue generation. 

“Your financials are crucial for every pitch and must tell the story that you can make money. The investor wants to see if you have hit your sales target before you pitch and honest predictions help to show how, based on the previous financials, you will perform to ably repay the loan. For instance, if you need a three-year loan and are making $10,000, the prediction could be that you will have a $5,000 increment every year,” he says. 

Non-disclosure: Mr Mukembo says professional investors will not accept to sign a Non-Disclosure Agreement before hearing your pitch, therefore, do not include any materially sensitive information that you are not comfortable disclosing.

Research
Investor type: While most investors in Uganda are looking for impact-causing projects, Mr Shiyomitsu urges entrepreneurs to research their investors. 
“Is he an environmentalist? Are they investing in Environment Social and Governance (ESG) aspects? Whatever your intended investor specialises in should be highlighted in your pitch. That way, they are drawn to you and what your business will offer,” he says.

Furthermore, if your investor is giving credit, Mr Shiyomitsu says these need to see consistent, accurate and updated information about your enterprise.

 “The investor is looking for collateral and security, and while it may not be in the pitch, it is what the investor will want to hear before they are sold out. Without it, the pitch contents do not matter to them,” he says.

Investor history
Mr Mukembo says you need to find out what the potential investor has invested in and how those investments are doing. 

“Invest time in understanding whether your target investor is the right fit culturally, for your stage of investment, and so on so that you are not disappointed down the road,” he says.

Business partner
Some investors want to invest using equity hence contributing a certain amount of money to an entrepreneur’s business and getting shares in return.

“However, many entrepreneurs do not want to let go of even 5 percent of their business share. That could be because of the horrendous stories of investors that eventually take over people’s businesses. 

Nonetheless, that is not so for all equity investors as some are happy to get their dividends at the agreed time consistently and later sell for a profit.

Concluding
To bring the pitch to a solid close, Mr Mukembo says to end with a discussion of the key team members and what uniquely qualifies you and them to address the problem and capture the market. 
“Anything else should ideally go into the appendix for discussion if or where prompted,” he says.