My First Investor Pitch

INVESTOR PITCH 101

In this post I would be discussing my experience at my first "pitch to investors" event. It was deeply insightful and I decided to share my experience as well as what I have learnt and some do's and don'ts along the way as well.

Enjoy!

Before I start,

It appears as though I haven't posted in a while... two weeks precisely. Oh well. That is a perfect explanation for that.

But not to worry.

I have got some really special topics in store for the next couple of weeks to keep you glued on here.

Well unto why we are here. Remember I had put out information on questions that people might have about pitching to investors.

Special thanks to those that responded, I would do my best to give answers to your questions as best I can.

Arigato!

GIANT DISCLAIMER: I AM NOT IN ANY WAY CLAIMING TO BE A GURU OR SAYING THAT MY PITCH CERTIFIED ME INVESTORS OFF THE TOP OF THE BAT, BUT JUST SHARING MY EXPERIENCE AND THAT OF OTHERS THAT WERE PITCHED THEIR OWN STARTUPS AS WELL LIKE I DID. SO HERE I MIGHT GIVE SOME DO'S AND DONT'S. BUT LIKE I SAID, DONT TAKE MY WORD FOR IT. DO MORE RESEARCH!

Capisce?!

Well moving on....
A mentor who had 'unwillingly' following the progress of my company especially through my blog post and other information that I shared with her and my other whatsapp contacts decided to invite me to a 'pitch to investors' event organised by her and her class of Lagos Business School Alumni. She selected a panel of 5 highly experienced and successful Nigerians that were looking to divest into technology startups ( Whats in it for the investors? the investors were looking to own shares in a fast growing tech company ).

I chuffed at the opportunity and didn't even consider whether I had another appointment at the time. I said yes, straight up!. Who wouldn't?

I had two days to prepare but as usual I had another event on the previous day, "The Boardroom". This event was extremely spicy. But it is a story for another day.

So I had to work through the evening and the early into the morning preparing my pitch, but fortunately or rather unfortunately, I had everything set at 3am and managed to get to bed by 4am. The pitch was scheduled for 9am. But nature tried to pull a stunt!

I woke up at 10am. For an event at 9!!!!!!

I am too sure that this is the look on your face.

 But as my life continues to be a testament that my guardian angel is stronger that the witches in the village. It had not started by the time I got to the venue at 10.30am.

 They had a preamble networking session that took an hour and a bit. I got in and settled down properly just in time for the pitch.

Well they introduced the panel and they had the exuded fear amongst the startup Entrepreneurs. We tried to pelt out smiles to disguise our fears but the sweat in our pits gave it all up.

PS: They didn't have presentation equipment and that pissed me off though because I had done a pretty sweet presentation on Prezi.

I chose to go last whilst I learnt from the experiences of the startups Entrepreneurs that pitched ahead of me. But I lost track of their pitches, because I saw something more important. Spicy chicken! Wawwu!

PS: It didnt really have Donald Trump's head on it, but it seemed more fun doing this. But the chicken did dance in my stomach, I would tell you that much.

I did hear a couple of them pitch for various amounts first N10million for 2% equity , N20million for a 10% equity and N20million for 4% equity.

PS: So I am also going to say this, as it is totally normal, many startup Entrepreneurs can tend to be intimidated by the panel (It was coined the Eagles Nest, similar to the Dragon's Den and Shark Tank). This is in no way meant to be discriminatory towards the participant/startup entrepreneur.

One of the startup Entrepreneurs, had written out what he had planned to say on paper. Once he began, his lips were moving, but words were not coming out.

First lesson: NEVER, I say it again, NEVER! write a pitch down. It's amateurish. Despite the fact that I am still an amateur, there's no need for me to let the investors know that. You should practice enough in front of the mirror, convince yourself and make sure you know every inch and cranny of your business case before you pitch!.

Although this didn't particularly didn't have anything to do with me.

Second Lesson: Investors love to see traction, might not be very focused on it for startups, but good growth metrics, other forms of KPI's (Key Performance Indicators) would be good to, increasing user base MOM (monthly increase). They usually vary based on industry. Try not to ask an investor to invest in your company to build your MVP if you haven't tried to prove the business organically at first. For example, if you want to build a site that gets people jobs, first start by creating a blog that discusses about company and their employment culture and also put job opportunities that you see and try and work towards being a outsourcing recruiter for small/medium companies and keep record of your readers and the increasing number of companies you serve. It would show that there is a viable business, they can invest and then you build the site and drive users!. 

MUNA'S NUGGET: Remember! Technology is an enabler for business, You, your team and most importantly your customers are the business!

Well down to my pitch. Here more lessons would come up.

I was given 3 and a half minutes to pitch.

Here was how I planned the pitch.

1. Story: The beginning (PS. You can call it whatever you want)
2. The problem
3. Customers
4. The team behind the solution.
5. Our solution
6. Growth Metrics/Expansion Plans
7. Request
8. Demo

I did not even get past the first bit before my time was up, although I was able to illustrate the problem from a personal angle.


I was stopped almost immediately and  asked what the business was about, I had to go straight to the point. I was asked to speak of only the necessary bits.

I spoke about my being SME's that required delivery services to clients residents not only in their cities but in other cities across the country as well as other cities abroad. I mentioned that I had test run the business for a period of 4 months and raised a revenue of N350,000 ($1,000) from an initial investment of N100,000 ($285). I spoke about my company presence in both Lagos and Abuja. I mentioned that I was looking to carve a niche of end-to-end delivery services for deliveries from one state to another in a bid to reduce the hassle of retailers looking to waybill products to their customers and their customers also going through the hassle of picking their orders from the designated parks.



I didn't get the chance to talk about our distribution strategy and our growth metrics.

The questions I was asked?

1. The first investor asked how much investment I was there to ask. To prevent being drilled like the rest of the StartUp Entrepreneurs, I said I was looking for advisors to whom my co-founder and I would be accountable to, to ensure that we are constantly driven to grow the company in the fastest possible times. I said advisors with experience in Legal, Relationships with Transport Companies or experience in Distribution Strategies as well as an Advisor in Finance to ensure that the company runs within its limit and has experience in raising funds from local and international investors alike. I was about to give an investment request, but my opportunity was already gone lol.

I was going to ask for N30million for a 5% stake in the company. It means I value my company to be worth N600million. This was an educated guess as it relates to similar logistics startups in the Nigerian space.

2. The second investor mentioned that the Nigerian logistics industry provided steep competition especially with regards to Lagos and Abuja and expressed the need for quick expansion. He mentioned funding to always be important.

3. The third investor appraised my presentation to be great although he expected to hear more from me about our growth metrics but was content because I didn't want investment so he had nothing to say. LOL.

I should've had a rough figure in my head  at least.

4. The 4th investor appreciated that I tried out the business with as little as I had and proved to myself that the company had traction. He was also happy that I had also raised funding through two different means and was looking forward to see what those investments would do for the company. In my opinion he was the most interested in investing in the business.

5. The 5th investor didn't comment. But a floor member that was a manufacturer and distributor in the agro-allied space urged me to consider niche areas like cold food distribution as well as international deliveries to countries like the UK and US and the rest of West Africa to pave way for Nigerian businesses to grow the customer base to potential customers abroad. She emphasized greatly on raising as much funds as possible. She admonished me for not being bold to ask for investment as investors typically act as advisors regardless, as they would be committed to ensuring that their investments remain viable.



I had stage fright, well more like I was nervous at the beginning (completely normal by the way) but it soon became a conversation between the Investors and I and we did share a few laughs. But the advice I got from them would help me to grow my business and consider different niches that I never had considered in the first place.

Watch the pitch here

Well to answer the rest of the questions asked, I would take them one after the other and if I missed your question, just indicate in the comment section below and I would be sure to respond accordingly.

1. What is a pitch?

In simple terms it is a presentation of your ideas to people. You pitch everyday. To your customers to buy your product, to your parents to give you more money, to your boss to give you time off work. It is presenting an idea to someone or people, to accept your idea and support it. In this case, I was trying to convince people to put money into my business.

2. How does one best illustrate his/her idea to investors?

It is widely spread that if you cannot tell your investors what problem and how you are going to solve it in 3 minutes, there is a high chance that they would not even be interested in it. In my opinion, this is the order to best illustrate your idea.

a. The problem (What troubles you in your community/country/ the world?)
b. Your solution (How are you going to solve that problem)
c. Your team (who are the people solving the idea, at the start of any business, they are putting their money into the drivers of the idea, they need to know the people working at the success of the company).
d. Uniqueness of the idea/ Risk in doing the business (why is your solution different in the market?, What would make the idea not work and how are you working to mitigate the risk?)
e. Niche (Who is your target customer market that you would scale from. It would be good to speak about your revenue model here)
f. Growth Metrics/Financials (how many customers have you had, how much revenue have you raised)
g. Investment choice (how much you want from the investors and at what stake, or if you want debt, what is the return on investment (ROI))

3. How does an Entrepreneur defer idea theft?

I could be wrong, but an Entrepreneur has to run the risk of sharing his ideas with as many people as possible. You have to trust that no one shares the same passion and methodology that you have to drive that business. If someone steals your idea, it does not come from the same place, for me my passion comes from a bad experience I had, so I doubt if logistics has hurt anyone as much as it has done me.

4. What do investors really want to hear?

The investors primarily want to hear how profitable your business is and how it is going to grow exponentially. They are most interested in the ROI (return on investment within a specific time frame).


5. Business Model?

Your business model explains your solution and how you intend to attract customers and make money from them. You have to break it down like I did in No 3 to let them understand what your business is about.

6. How do you explain the viability of your idea?

This is a bit tricky. This is why most times investors prefer people with either deep insights into their industry. Best case scenario, you would have done your business over a certain period of time to have figures to show that your business has traction(you have customer and some of them are already paying). If you do not, you are best illustrating the problem and what your intended solution is, showing them a demo of your MVP (mininum viable product - your solution). Especially if it is an app or a web platform, let them have a feel of it. You might try also to pick an existing solution and use their growth rate to show that the industry is viable and ready for your own solution.

7. What questions do investors typically ask?

I illustrated the questions they asked me earlier in the post, but they can literally ask you any question that makes them more confident in putting money in you. Even personal ones, be ready enough for that.

8. What to say or not to say in the investor pitch?

An investor pitch usually takes 3 to 5 minutes. So you must say as little as you can to convince him to invite you over for a meeting or send him some documents to know more (like some investors did for me). Try not to bore them off the bat with stories that are unrelated to the business (customers and your solution). I made that mistake, do not make it. LOL.

Thanks for reading,

If you have more comments or questions to ask, do leave it in the comment section below. If you do not, I have one for you.

HOW DOES A STARTUP DETERMINE A VALUATION? 
(how much do I say my startup company is worth, especially if I am under a year in operation?)

Again respond in the comment section below....


Click here to watch my pitch

I hope you loved reading this as much as I did writing it.

Best regards,
Ejieji Muna
(HubbonNG)