Making the perfect pitch takes more than just having a great idea for a business
For entrepreneurs who want to start a new cannabis business, the capital raise can be as challenging as the licensing process. I often warn new owners it can and will be your full-time job, often on top of your other role of building the company. So how do you keep up and make a pitch that brings in the investors?
Raising capital is all about having the right story backed by the right numbers. Everything you build should be done to make the story better or show stronger potential returns. Entrepreneurs often spend time on things important to them, but investors may see those efforts as superfluous.
So let’s lay out a few key steps to make the perfect pitch to those with capital to get you funded
1. Package your Investment Pitch
Every investor wants to believe in your business but knows there are other pitches to hear. Be mindful when crafting your pitch deck, summary and presentation, as it all should come back to a cohesive story. Your goal is to talk investors through the story of how you will do it better, how your team will pull it off, how you project to get there and what the return on investment will look like. Your story should not be fictitious or too long, and it must flow naturally for the person pitching the story. There are hundreds of online resources to find sample pitch decks and summaries, but make sure your pitch highlights your unique proposition and showcases what you want the company to be.
2. Polish your Image
Your brand is everything. It’s crucial to spend the time and money to have someone craft your brand in a way that will capture the imagination and hearts of your audience. Make sure it fits the target market you plan to capture and use it across all your materials to showcase to investors.
If you are not a branding guru, an agency or consultant can be a good early investment. Interview them and make them prove they understand your vision and know your audience. Expect to be wowed. If not, keep looking.
3. Show Me the Money
Some investors will skip right to this part. Be prepared to speak on every figure in any of your materials. Failure to answer these questions will cause skepticism and potentially kill a deal. If you are not the numbers expert, plan to have that person present during the pitch.
Often, deals with a great plan and great pitch end up not getting funding because the numbers were too good. Many entrepreneurs inflate their projections and show immediate returns to the investor. Any savvy investor knows this is not the reality 99% of the time. It’s okay to take time to build a client base and grow sales.
4. Practice your Pitch
Long before you get in a room with a potential investor, make sure you have nailed down your pitch. Those who practice and can recite their pitch with passion will have a way better shot than those reading off a PowerPoint presentation.
Many organizations will allow you to pitch, as they are designed to help startups. But if you have to use family or friends, ask them to be critical and act as a potential investor. Make sure they poke holes in your pitch and ask really hard questions. As they do, record the session, then go back and make sure to change your pitch to circumvent those questions in the next run-through. After lots of rehearsal, you should be able to pitch with ease.
The cannabis industry is highly competitive, and investors are hearing a lot of pitches from all angles. Go in strong, lead with what makes you unique, do not hide the numbers and, above all else, show your confidence that what you have can and will make them a return.
Ben Smith is the CEO of business consulting firm Xcellerate. His team works with clients to develop business plans, create marketing strategies and turn ideas and research into revenue. As a marketing and operations veteran who has helped create several billion-dollar brands, he is sought after to help new operations launch or expand.