Starting up

The art of the pitch - what angel investors are looking for

3 min read

Funding is the lifeblood of any business. But when you’re in startup mode, before you’ve had the chance to get profit pumping through your company’s veins, finding investment from external sources can be crucial.

One source that New Zealand startups are increasingly targeting are angel investors. These are typically high-net-worth individuals with strong track records in business who, as part of their investment portfolio, invest in young companies with strong, often global, growth potential.

Market validation

Due to their experience however, and the volume of startup pitches they see, angel investors need to be presented with compelling evidence of an appealing opportunity before they’ll part with their time and money.

What do they want to see? One of the clinchers is market validation. You might think you have the greatest business idea ever, but angel investors will want proof that there’s a substantial market need for it.

Quality research can help support this, but the best evidence a startup can provide is real customers. So if people are already handing over money for your product or service – or if you have highly reputable companies trialling it – this kind of market traction is something potential investors need to see.

What do you have to offer

It’s often said people invest in people, so angel investors will also want to know about you and your team. Your idea may be new, but what experience do you already have in this field that will give you insights or a competitive advantage over others?

And even if you’re an expert in your field, angel investors want to see that a founder is coachable. These investors are willing to share their expertise and contacts, but they don’t want their advice to fall on deaf ears. A pitch that includes evidence of how you’ve adapted your idea in response to feedback is one way to show this to investors, as is a willingness to respond openly to any questions they may have.

Lastly, angel investors want to see the passion a founder has for their venture. It takes tenacity as well as talent to get a startup off the ground, so you’ll want to tell investors the story of the journey you’ve been on with your business in such a compelling way they’ll want to join the ride.

The pitch deck

These are all factors to consider and weave into your pitch deck – the brief presentation a startup founder uses to ‘sell’ their business idea to an investor audience.

It should be short and simple; most pitch decks have fewer than a dozen slides and cover the primary facts an investor will want to know – why and how your product or service fills a compelling market need. An example could be:

  • Introduction: Who are you? What is your vision?
  • The problem: What need will your venture address?
  • Market opportunity: What is the size and scale of that need?
  • Product or service: What does your solution look like?
  • Revenue model: How you will make money?
  • Sales and marketing: How will you reach customers?
  • Team: Who are the people involved?
  • Traction: Do you already have customers?
  • Competitors: Who are they and what advantages do you have over them?
  • Financials: How will your revenue grow over time?

Here’s an example deck by tech start-up Twine, that helped them raise over $1million USD. This pitch deck went through 23 iterations before it was deemed good enough. Their CEO, Stuart Logan compares a well-designed deck to wearing a tie and pressed button up to a job interview: “It won’t get you the job, but it will prevent you from having to dig yourself out of the hole a wrinkled tee and cargo shorts would have created.”  

And practice makes perfect. Hone your pitch by practising it as often as you can in front of the mirror, friends and family, and trusted colleagues and mentors who will give you constructive feedback.

Once you’ve got your pitch down, there are a number of events that offer founders the chance to present to angels or other types of investors in the startup ecosystem. Each year, for example, BNZ invites young firms to technology conference Webstock, where they get to pitch their business idea to a judging panel of tech industry veterans as part of the BNZ Startup Alley competition.