Pitching to Angel Investors: What problem do you solve?
When seeking funding from an angel investor or other sources of venture capital, the first element they’re going to look for in the executive summary of your business plan or your pitch presentation is the solution to a customer problem. In other words, what problem does your product or service solve for the customer that is unique?
To ensure that you’re going to get the attention of an investor, make sure you address the following in your plan and pitch presentation:
1. Be Specific and comprehensive at the same time. It’s important to give enough detail so the investor understands what you’re doing without giving too much information about the inner workings of the application or service offering. In some cases, it is helpful to express the company’s product/service in a few words such as “We make radiation-hardened memories.” This helps the investor in on understand the company’s offering.
2. Develop an actual elevator pitch. You’ve got one minute to convey how compelling your offering is to an investor. Go! Can you do it?
3. Your problem should be large and compelling - the problem you’re solving should be large and compelling enough that people not only want a solution, but need one and are willing to pay for it.
4. Use numbers to describe the problem. The numbers you present can the problem more compelling to an investor. For example, how many people suffer from a disease or condition that you potentially solve? How much money is wasted on inefficient solutions or methods?
5. Talk about the business solution and not the technology. This is one of the biggest mistakes that entrepreneurs make over and over in their pitch presentations and in their business plans. In short, investors care less about your technology and more about how you’re going to make money. Focusing on that is paramount to getting follow up meetings--you can focus on the technology at the due diligence stage.
6. Tell a story. Talking about the problem you solve in a story format that’s easy to understand can help you present your case in the most understandable fashion.