As a business coach who has worked with dozens of successful leadership teams, not a week goes by when I don't get a request to discuss a business plan or review a pitch deck. People want me to tell them if their strategy is right, whether their technology plan is doable, or if their leadership team has the right experience. I tell them all the same thing.
The first thing to address in your pitch is not your return on their investment. Instead, you should focus on the impact their investment will make. Don't get me wrong, you need to show a return, but that's not enough to get them to write a check. You need to show them their money will have impact.
Impact can take many forms. It could be anything from how you're going to change the way people shop for clothes or how you're going to provide construction loans to people who don't have access to credit to how you're going to bring new treatments to people who are suffering. The impact doesn't need to be grand or noble, but it needs to be personal.
Research shows that while people do need factual, rational data--things like financial forecasts, returns on investments, and risk profiles--to make decisions, they only use them to justify decisions they have already made using their emotional gut.
In other words, investors will first decide if they want to invest in your business based on personal and emotional factors. Then they consider the rational factors to decide if they should invest.
This means you need connect investors to the impact you will make with your business if you're going to effectively sell them on your business and get your funding. To do that, you need to do these things.
Explain the problem you are solving.
Start by explaining the problem. Whose problem is it? When do they have it? When did it start? What options do they have? What does it feel like to have the problem?
For example, if you're selling a new type of mouse trap, talk about how current mouse traps and poisons don't work very well, are difficult to use, and can injure people. Focus on the feelings related to the problems: frustrations, danger, and fear.
Explain why the problem is a problem.
Once you've detailed the primary problem, dig deeper and show the impact of the secondary problem that the first problem created. Ideally, this next level is not initially obvious and will be a surprise to the investor. Show them the impact they will have with their investment, and try to show something he or she didn't initially see.
In the mousetrap case, you could talk about how not catching the mice leads to increased chances of the spread of disease or the damage to homes that can lead to significant and costly repairs. Show how the problem is actually bigger than one might initially think.
Explain the better future that results once the problem is solved.
Once you've detailed the primary problem and the deeper impact, describe a better and highly desirable future. Paint a vivid picture for your investor to become emotionally attached to. Get them to want to see your vision for the future realized.
In the mousetrap example, describe how great it will be to have mice-free homes where healthy children can play freely, without parents worrying they will be hurt by traditional traps and toxins.
Organizationally, the visualization can happen at different points of the investment conversation. I like to flood the investor with the rational data prior to making the emotional pitch. I might also focus my pitch differently depending on what I know about the investor's values and what I know about him or her as a person.
In the end, a successful pitch will need both rational and emotional content. The ways the human mind works and the ways each individual makes decisions are multifaceted. Our investment pitches should reflect that.