Television shows like Shark Tank make for fun viewing but the reality of a pitch to investors is less about stylized drama and more rooted in the wisdom of professionals like Lorenzo Seu. The Head of Finance for NewtonX, Mr. Seu is part of a company is radically improving the way businesses can perceive the market and tap into it with greater strength. NewtonX is a B2B (business to business) market research company whose innovative use of AI is granting more accuracy and insight to its clients. The company recently presented their findings about Covid era effects and the future in a Fortune article. You don’t have to be an industry leader like Facebook, Samsung, Citi, or others to tap into the knowledge base that’s behind NewtonX; Lorenzo feels a compulsion to steer startups and entrepreneurs towards success through the benefit of his professional insight. Taking part as a judge in events like the Queens College tech incubator “From Idea to Business” and others during Covid illustrates Lorenzo’s dedication during these challenging times. He readily notes that there are many opportunities this year and the difference between failure and success often hinges on proper assessment of these.
Mr. Seu has a long history overseeing the Finances of successful companies in both Europe and America. He cautions that though daunting, the proper presentation of financial statements is not to be approached incompletely. This should include three statements: (i) Profit and Loss (listing revenue and expenses), (ii) a balance sheet (list of assets and liabilities), and (iii) a cash flow projection (cash inflows and outflows from the various activities). At the very minimum, founders should provide a profit and loss statement. Don’t skip a list of metrics or KPIs (Key performance indicators) that are specific to the market.
Over diversifying your services/products/target can be a major mistake. Focus on a simple basic idea. You can adapt to your market or develop a new product later, avoiding over complication which can present more opportunities for failure at the onset. Showing many ideas of product/services is actually not a strength for a new business.
Strive for perfection in the presentation of your pitch. Lorenzo confirms, “It should be obvious but a slide deck with typos, different fonts, no pagination, and no summary has a low chance of convincing investors. A business plan pitch needs a lot of preparation and rehearsal. Pitching a business is very specific in terms of speed, vocabulary, and tone. The presenter needs to be very structured. The speech, sometimes called an ‘elevator pitch’, needs to be delivered in less than five minutes with the key takeaways. There is no need to have a presentation with management consulting firm standards but founders whom have never created a Business Plan need basic skills with slides and text documents. Free or cheap online training are available to quickly improve presentation skills. This significantly increases a business plan’s credibility. Simply put, the presentation must be perfect. This applies to the written and oral communication.” Complementing this is the need for clarity in the business plan. The type of service or product sold by the company needs to be obvious. Having a good idea or an innovative product is not enough to run a business. Product pricing, sales channels, delivery model, or overall economic model should be well defined. Mr. Seu adds, “In all honesty, it is not worth pitching a startup or its business model if the economic model is not clearly defined. Presenting something undefined or unfinished is a loss of time for all stakeholders. I’ve seen pitches with great ideas but with literally no clue about the business model.”
Establishing interest is not only about the idea and the execution; the people behind it retain an equal importance. A start-up is about everything, including the people. A good idea or innovation cannot succeed without the right executive team. Investors invest in people not strictly in ideas. Provide a short summary of the founder and the team’s background, making sure to highlight successes. Congruently, the people you are pitching to are important and knowing how to communicate with them to deliver the information that they are interested in is essential. Adapt the language and vocabulary you use to them specifically in order to ensure a successful delivery of information and concepts. Lorenzo recalls, “I reviewed multiple Business Plans in the Biotech/pharma sector. New drugs, molecules, or processes can be extremely complex to understand. A non-specialist investor would have a hard time to create its own opinion. Adding charts, drawings, or analogies with nonscientific verbiage can be extremely helpful in this scenario and your pitch should follow a similar example that speaks the language of those you are speaking to.”
Finally, though you are excited about your idea and pitch, don’t be overly optimistic. Present best, worst, and intermediate case scenarios. Lorenzo affirms, “Business plans that tend to be overly optimistic are not consistent. For instance, if the business plan shows that revenue will double every year during the next five coming years, founders need to explain why with credibility.”
2021 is a boom year with start-ups raising more money than ever from investors. More than $290 Billion has been raised as of July, already surpassing the entirety of 2020. The number of deals above $100 million is also increasing, especially in the US. New opportunities in areas such as crypto currencies, artificial intelligence, AR & VR, and others are leading to speculation that going niche is the answer for many startups before expanding. Creating a startup is getting easier while sustaining it has become harder. Opportunities are plentiful for those who go about acquiring investors in a thoughtful and well executed manner.
Writer: Coleman Haan