Nick Halliday (pictured) CEO at software design experts IDS Group is a serial entrepreneur with over 20 years’ experience in digital businesses worldwide and a proven track record of delivering strategic software solutions that provide a competitive edge. Nick understands the difficulties that can prevent technical visions from getting off the ground and the growing pains that come with SaaS business growth.
From assisting with securing seed or pre-seed funding, attracting initial clients, and creating a future development roadmap, IDS has partnered with tech start-ups across many sectors — from healthcare to construction, and finance to ecommerce — through its accelerator programme.
Here, Nick shares his top tips on how to write a killer SaaS investment pitch.
Know your audience
Always take time to do your research before approaching any venture capitalist. Understand where their focus aligns with your company and development plans and ensure that your pitch homes in on this connection and interest.
Use your pitch to tell your story
For the initial contact, many investors will be looking for a preliminary elevator pitch. This should be a short, sharp, two-page or 30-second sell on your company. Designed to ‘hook’ an investor in with key facts and a summary of the investment, it should show precisely who are you, what the product is, and how big the opportunity is.
If you’re successful in moving to the next stage, this is where your detailed 15-20-page follow-on pitch will come into play.
You’re selling yourself, not just your product
When pitching to an investor, they are assessing you as an individual as much as what you’re selling. Rehearse your pitch to an audience, and make sure that you can deliver on all fronts. You should be able to convince potential backers that your leadership team is trustworthy and knowledgeable.
Remember that venture capitalists are constantly approached with opportunities. Wherever possible, a warm introduction via a shared connection or trusted colleague is the most direct and fruitful approach.
It’s all about the numbers
How many times have we seen the most impressively delivered presentations on Dragon’s Den fall flat when it comes down to the numbers? This is one area where you absolutely cannot fail.
Preparation is everything here. Know your market inside out, be confident in your delivery and don’t exaggerate the numbers. Most importantly, when illustrating where and how the investment will be used, show detailed projections of how and when they can expect a return on their outlay.
Ensure that the level of investment that you are asking for is in line with your market value. Likewise, be realistic with your company valuation. If you’ve only been in business for a short time and haven’t yet secured a grip on the market, but you’re pitching for a six-figure sum, it’s likely to be a very short conversation.
It’s not uncommon for investors to ask for convertible promissory notes, SAFE agreements, or convertible preferred stock investments when negotiating with new starts-up. It’s good practice to research and familiarise yourself with these terms beforehand.
Typically venture capitalists will be looking for a minimum return of investment (ROI) of at least three times —with the target closer to ten.
Keep this in mind when presenting your company, both in its current position and by demonstrating the potential for upscaling to help deliver that top-level ROI.
Don’t overstay your welcome
Timing is everything. If you’ve been given a ten-minute slot to present, or the investor has requested a two-slide introduction — make sure that you stick to it. If you can, always aim to finish a minute or so earlier to allow for questions. If you over-run your slot, you’ll be remembered for all of the wrong reasons.
What makes you stand out from the crowd?
Clearly demonstrate exactly what makes your product or service unique in the marketplace. Try to anticipate the key questions investors are likely to ask and be sure to cover them in the pitch.
The less risk associated with a project, the more likely the investment.
Almost all start-ups bring a level of risk with them. Your job is to convince investors that you have considered these and built up a robust plan of how to minimise and mitigate against them.
Include an exit strategy
One of the most forgotten pieces to include is the most vital. Be sure to give due planning and attention to the investors’ exit strategy. Three-to-five years is generally considered a reasonable time scale for investments to achieve their goals.
Ultimately, a venture capitalist will be looking for projects that deliver the biggest profit in the shortest space of time — a successful pitch will include a projection of how this will be achieved.