Standing outside of the door that could potentially mean life or death for your company, you begin to question why you decided to have that second cup of coffee. Your heart is pounding like a teenager’s headphones, your palms are itchy with sweat, you feel nauseous, your limbs are trembling and your bladder is uncomfortably full.
For many budding entrepreneurs, this scene is all too familiar.
Even the best of us suffer from the trials and tribulations of sweaty palms, pounding chests and ill-timed toilet urges. They are a natural response to what is, essentially, a life-changing situation.
In your hand, you hold the paper version of an idea that you believe will take you to the dizzying heights of entrepreneurial success, but first you have to convince a group of strangers that the thoughts in your head and on the pages in front of you translate into more than just a good idea.
Granted that public speaking is never an easy task, especially when a lot is riding on your performance. However, at the end of the day you are asking investors to part with large sums of money. It is your responsibility to give them a reason why they should, whilst delivering this in a way that is well thought-out, informed and easily digestible. With this in mind, the best thing a budding entrepreneur can do is prepare. And maybe avoid that extra cup of coffee.
1. A good pitch starts with a great idea.
This may seem obvious but when all’s said and done, if your idea is rubbish then the great team and flashy website will all count for naught. Ask yourself – why is my idea worthwhile and unique? Do your research and make sure that your idea is wanted, needed and not done anywhere else.
2. Find your customers. No customers = no sales!
Market research is essential for any entrepreneur. If you aren’t able to demonstrate an existing market for your product, then it will be virtually impossible to prove to any investor that you are capable of achieving meaningful growth. Ask around, conduct surveys, organise focus groups, offer free trials, tasters, samples. Today’s consumers demand a lot for their money, therefore if your product is neither needed nor wanted, then they will simply go elsewhere.
3. Be engaging, be confident and be excited. But don’t be obnoxious.
At Mercia, we work with a lot of talented, engaging entrepreneurs. They work hard, they do what they love and they are passionate about their product and their team. You can read an interview with one of our young entrepreneurs, Dan Strang, here. Remember, however, that arrogance and cockiness are not synonymous with ambition and confidence. Never assume that you are the font of all knowledge, invincible to error and unconquerable in the market. There are always people to learn from and to be inspired by, and the best entrepreneurs will surround themselves with these people. If you believe you know it all, you’re in the wrong business.
4. Keep your deal structure free from complications, if possible.
Most investors will be looking for low-risk companies with a strong managerial team, willing to take on advice and input. Companies with complicated deal structures and large amounts of debt increase the risks of investing and make the future success of that business much harder to predict. There’s also a chance that the investor’s voice will be lost amongst the din, making their input less likely to be taken on board. Be sure to explore your options carefully and try to think in the long as well as the short term.
5. Research your potential investors. What sector and stage of business are they looking for?
There have been many times when my head has hit the keyboard, the keys spelling out “WHY” in puckered red marks on my forehead, as I read a pitch that is not remotely related to early stage UK technology. Do your research. If your pitch doesn’t fit what we’re looking for, I won’t even finish your first email.
6. As technology investors, we’re looking for more than paper and PowerPoint.
A complicated diagram and some detailed notes may look impressive to friends and family, but investors prepared to part with upwards of £50,000 will be looking for more. Much more. As technology investors, we want a prototype, a minimum viable product (MVP) or even early revenue. By doing this, you can prove to us not only that your product works, but also that you are committed to the idea.
7. Keep an open mind and be willing to accept external input.
One of the benefits of receiving investment from Mercia is a dedicated and experienced investment team that takes an active involvement in the growth and scale of your business. If you are offered support, take it. Even the likes of Sir Richard Branson will have received help and support on their journey. It’s the only way to progress. Avoid being too precious about your work, and be prepared to admit mistakes. The learning process never stops. And if it does, your business will have nothing new to offer.
8. Embody passion, vision and energy.
OK, so it may be a bit of a cliché, and the last thing I want you to do is stand up and tell me that you have passion, vision and energy (please, please don’t do that). Good entrepreneurs need to SHOW me that they have these qualities. Prove it in your pitch, in your business plan, in your delivery and in your company. Embody these qualities as a part of your work/life approach and you won’t go far wrong.
9. Own that business plan like a boss (literally).
Your business plan is the glue that holds the pitch together, and a well-written one will always be every entrepreneur’s bread and butter. Make sure you are specific, back up all your claims with quantifiable research and don’t try to pull any punches. You can read a fantastic piece on how to write an effective business plan here.
10. Pitching new IP for a gaming app? Keep your options open.
Obviously never say never, but right now the market is saturated. Over 500 game apps get launched every week, meaning it is pretty much impossible to secure awareness, even if the idea is strong. Until Apple and Google change their business model, I will be steering clear of this sector.
Mike Hayes has over 23 years’ experience in interactive businesses. He was formerly CEO for SEGA in Europe and America, presiding over a turnover in excess of £400million. If you would like to pitch your business to Mike, you can send an email to firstname.lastname@example.org.
In the thick of it
nDreams CEO Patrick O’Luanaigh discusses his first experience pitching to Mike.
My first pitch to Mercia was in a café in Weymouth. Mike and I had been trying to meet up for a couple of months, but train strikes, car breakdowns and other random events had cropped up, and it felt like the meeting was never going to happen! Fortunately, neither of us gave up.
I had worked with Mike many years before at a games developer/publisher called Codemasters, but I hadn’t seen him for a long time, so it was great to catch up with him again, although I will admit that, at the time, I knew virtually nothing about Mercia!
I talked to Mike about our plans, our pivot to focus purely on virtual reality (which we did very early on!) and my belief in the VR market and technology. Fortunately, Mike was aware of VR and understood the potential better than any other investor I had spoken to at that time. This was prior to Facebook buying Oculus, so it was early days in terms of the technology.
I think our focus and key message were right from the beginning, and this is what grabbed Mercia’s interest. We also had a track record in generating revenue and building a studio, which definitely helped as well.
However, I did make mistakes. Given my prior knowledge of Mike, I approached him as much for advice as for investment, and it may have been better to have had a clear plan and vision in place prior to the meeting, rather than risk appearing a little indecisive!
Nevertheless, it became rapidly apparent that Mercia would be a great partner for us; their view of the world and their approach to investing was a very good fit with ours.
Part of the attraction was also Mike’s involvement, given his experience and knowledge of the games industry from his time at Nintendo, Codemasters and SEGA. If this experience taught me one thing, it was that getting an investor should also be about much more than just the money.