Pitching for funding? Here’s how to seal the deal

Every other day, Dr Jacqueline Kisato, a lecturer at Kenyatta University, is contacted by aspiring and established entrepreneurs seeking additional capital for their businesses. The entrepreneurs, most of them from start-up companies, struggle to convince Dr Kisato and her colleagues that their businesses are worth the money they seek.

Dr Kisato is a mentor at Kenyatta University’s Chandaria Business Innovation and Incubation Centre. Her job entails reviewing pitches delivered by entrepreneurs. Over the years, she has gathered valuable nuggets of wisdom which she often shares with her mentees to help them deliver a winning pitch.

Whether you are seeking funds from a bank, an angel investor, a venture capitalist or even a family member, she has come up with seven key pointers that come in handy when facing potential investors. 

1.Grow first, seek funds later

The best business ideas are the ones that provide easier solutions to an existing problem. These ideas, can easily be converted into businesses without much capital. When you start looking for additional capital at the initial stage, many investors will give you a cold shoulder as they are uncertain whether your idea is practical. It is better to start your venture with your own savings and only seek for funding when the idea has already proven to be a success in the small-scale. Only seek capital when looking to expand and scale up your production. 

2. People invest in teams, not ideas

Many people in search of capital want to go it alone when it comes to setting up businesses, not knowing that this sometimes puts off investors. Investors are not so much interested in brilliant business ideas as they are in the team that will carry out that vision into a profitable business. Investors want to be certain that should something happen to the main owner of the business that will prevent them from running the venture, a capable team behind them will carry on the work. As such, surround yourself with individuals with diverse talents, and while pitching to investors, highlight each team members’ specific strength. 

3. Have your ‘elevator pitch’ at your fingertips

You should be able to clearly illustrate how your business solves a certain problem, tell who your customer is, narrate your financial story, explain your competitive advantage and forecast your future profit margins—all in under two minutes. This is what we call the ‘elevator pitch’. It comes in handy when you might unexpectedly bump into a potential investor, such as riding in an elevator with a bigshot CEO. Your elevator pitch should serve to whet the appetite of a would-be investor and secure an appointment for a follow-up. 

4. Cut the clutter

When people deliver their presentations, a common mistake is a tendency to over-complicate their pitches with many irrelevant details. Their PowerPoint presentations, especially, are usually cluttered with lengthy paragraphs. “At the end of the presentation, this usually feels more like a Master’s degree thesis as opposed to a swaying presentation that it’s supposed to be,” explains Dr Kisato. It is advisable to keep your presentation clear and include more photos and less text in your PowerPoints.

5. Ask for only what you need and don’t give up too much equity

Another blunder is seeking more money than your business is able to handle. This is because these investments usually have to be paid for at a later date, and biting more than you can chew may leave you incapable of paying interests that may accrue in future.

Conversely, in cases where an investor asks for a stake in your business, you should desist from giving up too much equity. No matter how desperate you are for funding, you should learn to turn down offers that ask for a controlling stake in your firm. 

6.Learn from rejections

The Chandaria Business Innovation and Incubation Centre is often forced to turn down some ideas because they do not fit correspond with their vision. Being turned down is normal, and should serve as a motivator to do better. If a certain investor declines to fund your business, ask them to refer you to  friends who could be interested in the line of business you’re dealing with. When your plea for funds is turned down, ask questions that will seek to find out where you went wrong and use the information to boost your business before approaching other investors. Successful entrepreneurs have been rejected many times, but they take it in their stride. Do not let one negative review by an investor make you lose hope and abandon your vision. 

7.Seek legal advice when sealing the deal

So you got a follow-up appointment and delivered a winning pitch, managing to convince the investors to pump money into your business. At this stage, it pays to keep your excitement in check and take your time to read through the fine print. Before you sign anything, make sure that you consult a lawyer who will help you go through the contract and point out pitfalls that your non-legal eye might have missed.