Pitching to investors: Lessons from Lagos Angel Network’s DealDay first round

A few days ago, the Lagos Angels Network (LAN) announced it will be investing nearly N100 million in two successful start-ups from its first round of Lagos Start-up DealDay which held on 24 March, 2017.

While that may be heart-warming especially for the start-ups that will get the fund, what is more important were the lessons we learnt from seeing the final five start-ups make actual pitches to a room full of investors.

The Lagos Startup DealDay takes place three times every year and is a platform for start-ups in target sectors seeking funding to make their pitch for the possibility of securing a N50 million seed-fund.

The first DealDay was organised by LAN in collaboration with partners including VC4A, the African Business Angel Network (ABAN), Lagos tech hubs, incubators and accelerators. Over hundred start-ups filled the application, the number was reduced to 30, then 10 and eventually 5.

Pitching to investors is always a tricky adventure; it can go either way for a startup. Rob Yeung, in his book ‘The Rules of Entrepreneurship’ stated that ‘Seeking external funding requires a hard sell approach – persuading others that the opportunity to be had from your business is greater than the risks.”

It is that “hard sell approach” that the five start-ups at the LAN DealDay will bank on most but unfortunately only will get to the ‘finished’ line. How do you convince vastly experienced men and women in various fields that they should put their money in your barely two years old business? Here are a few nuggets we got from the event.

Punctuality

Be on time. If you are always the type that arrives at an appointment late, avoid it on the day of your pitch – and probably henceforth. You and your team should be at least thirty minutes early. Apart from sending good signals to your potential investors, importantly, it helps you go through your ideas and major points once again before you present it. You might just discover a stat error that has to quickly be corrected. If it is a slide presentation ensure you submit a copy on a flash drive to the people that will help you set up but keep your laptop on the ready as backup.

Relax

Yes, you have only ten minutes but take it easy on the tension. Another benefit of being on time is that you are able to relax and ease off much of your anxiety. Talk through other competing start-ups, you might learn one or two things that could help your pitch. You can also make new contacts that might go a long way to helping your business in the future. But be careful not to reveal anything that may give your competition the advantage before the potential investors.

Eye contact

Maintain eye contact. Your eye contact communicates confidence rather than when your eyes are moving from one corner of the room to another. Look the people in the eye and smile.

Go with your passion

Communicate your passion not your fine voice. The investors will only part with their money if they are convinced you know what you are doing and love it. In that regard, using real life stories that involves you dealing with a particular customer, may earn you some points.

Make it interactive

Don’t read your slide verbatim to the audience. Remember, these are very accomplished and intelligent people that only looking for a business they can put their money in. They are capable of reading your slide and expect you should know that. Hence, you will lose their interest if you have nothing more in terms of new information. As a matter of fact, each slide should be a background to loads of intelligence you plan to unleash on them.

Present facts

Do not brag, stick to the numbers. If your business will not make a N1 million in a month’s time, don’t try to convince them it will. Give them the facts. We also recommend a more than fair knowledge of the industry you are in. Tell them about your competition, what new innovation and solution your business is offering. Let them know your plans to eventually earn that one million and even exceed it.

Authentic valuation

Ensure your company valuation number is unimpeachable. Avoid reeling off a number off the top of your head. The investors have more experience than you do and therefore have a good knowledge of what a fairly new business like yours should be worth. If you do not know how to value your company, get a credible expert to help you.

How much do you need from them?

Settle this after you have the valuation numbers. Remember, the investors are not giving for charity; he or she will want return on investment. Hence how much of your company profits or equity is coming to them? Be clear on how far your company is willing to go to get the fund.

Expect a barrage of questions.

Some may make sense or seek to throw you off; others may not make real sense to you. In any case, they are testing you every step of the way. So maintain your composure and politely answer their questions.

Hopefully you will be among the successful two start-ups that will secure the fund at the next DealDay.