How To Convince Investors To Invest – 10 tips
July 15, 2022
To pitch to investors successfully, you need to know how to convince investors. But convincing investors is complex.
The biggest problem you have when trying to convince investors is that nobody knows the future. That means your investor cannot be sure if their investment decision will be successful. For this reason, their investment decision will not be rational.
I will repeat that: The most important thing to understand about persuading and convincing investors is that an investment decision is not rational.
Instead, you will only convince investors with a careful mix of logic and emotion. And that is why pitching to investors is so complex and so interesting.
Convincing investors is both a science and an art.
- Convincing investors is a science because it has been studied and we can see what works and what does not work.
- It is also an art because every investor pitch is different and every investor pitch is successful in different ways.
To help you convince investors, our pitch coaches have outlined ten of their top lessons for creating winning investor pitches. These tips are equally valid for M&A management presentations as for fundraising pitches This is based on over 15 years of successfully supporting companies and funds when they pitch to investors globally.
Top ten tips for convincing investors
1. Help your investor like you
It’s a truth universally acknowledged that investors in search of great returns will invest in people that they like. So, what do you do to become a more likeable investee? Three behaviours that we coach people to adopt when we work with them to prepare persuasive investor pitches include:
Listen as much as you speak. If you are good at listening and good at asking questions then you are part way there. A good investor pitch should be more like a conversation than a one-way pitch. That means you need to ask good questions when pitching an investment. Then, listening to your investor actively will help your investor like you more.
Be curious about your investor. This means showing that you really care what your investor says and thinks. What your curiosity and questioning will give you is a better understanding of how your investor sees the world. For example, you’ll hear what they speak about, what words they use and what’s top of mind. This will allow you to be better liked by your investor.
Find common ground. We all like people who are like us. Psychological research is full of findings that we like people with whom we share something in common. The link could be a school, a hobby, friends, past employers or even passport or first name. Find that link and you’ll find it easier to convince people.
2. Make your investors feel comfortable during your pitch
As well as helping your investors like you, to convince investors you want to make your investors feel comfortable. There are many ways of making your investors feel comfortable, and this will depend who you are talking to. One simple idea is to avoid Death by PowerPoint when speaking to investors. You have many presentation techniques that you can use that do not involve flicking the pages of a PowerPoint presentation. Read more here:
Another way to help your investor feel comfortable is to avoid contradicting their beliefs. For example, if you start your presentation by stating that the world is flat, you will alienate most investors. Instead, you want to get your investor nodding along with you towards the start of your investor presentation. This will help you convince your investor.
3. Understand that logic alone will not convince investors
“Don’t be a logic bully” is a favourite phrase of one of our leading coaches. But, as you might realise, logic alone cannot be persuasive. If logic alone was persuasive, then we would have no need for new business pitches. We’d all be persuading investors with spreadsheets.
Two and a half thousand years ago, Aristotle outlined how to create a persuasive argument. He pointed out that to be persuasive you needed a good balance of logos, ethos and pathos. You can translate these three Greek words as Logic, Credibility and Emotion. What this means is that to convince investors your pitch needs to have a healthy balance of logic, credibility and emotion. To understand this in more detail, have a look at this article.
Another aspect of convincing beyond logic is to “Show, don’t tell”. What this means is that it is much more convincing to demonstrate your success rather than just claim success. You can read more about this here
4. Convince by giving your investor a simple investment story
One of the most common mistakes people make when pitching to investors is to make their investor presentations too complex. They assume that because their investors are smart that they will be most comfortable with complex ideas and complex presentations. This is wrong. Complexity is off-putting. Our brains love simplicity. A great investor presentation should be made simple for your investor.
Having worked on hundreds successful investor presentations, we often surprise ourselves how simple the best presentations become. But making complex presentations simple is hard work. Anyone can pack a presentation with bullet points. It takes real skill to convince investors with just a handful of words and diagrams on a page.
5. Speak to your investor using their language
We’ve already mentioned how important it is to listen to your investor. But what should you listen for? One aspect of listening it to hear what your investor talks about. For example, what do they speak about? Is it growth, is it profits, or is it market share? If you know what matters to them, you can you can talk about that. That’s how you convince investors.
What metaphors does your investor use when they speak? Do they talk about driving the business? Do they talk about nurturing and growing the company? Or do they talk about battling the competition and fighting market conditions? If you can pick up on your investor’s metaphors, you will better understand how they see the world and then you can respond using their language. In this way you subtly become more persuasive.
Then, how do they describe successes?
- Does your investor discuss increasing multiples and how they value the business?
- Do they talk about increasing profits, or cash flows and margins?
- Or does your investor talk about the way they exit businesses with trade sales, IPOs and secondary private equity sales.
The more you can get into their heads and speak their investor language, the more you will convince investors.
6. To convince investors, be a teacher, not a sales person
Generally, investors don’t like being sold to. Investors prefer to feel they are reaching investment decisions on their own. On the other hand, investors love learning new things. One of the joys of being an investor is that you are constantly meeting bright new people with different views of the world. Every now and then you get real insight that helps you become a better investor.
- How can you help your investor see the world in a different light?
- What can you teach them about your industry or your approach?
- If your investor comes away feeling they have discovered something new, they are more likely to feel convinced they have a reason for investing in you.
7. Acknowledge where your investment story has weaknesses
Every investor story has challenges. The weakest investment stories paper over those cracks and say that everything if fine. If you want to be convincing when you pitch your investment, then you want to be clear that you understand your investment case weaknesses and that you have plans to overcome those weaknesses.
And if you can’t see any weaknesses? Then create some sacrificial lambs. Identify something that’s a bit more difficult in your business where your investment case might suffer if you don’t get it right.
By showing that you can see the problems in your business and demonstrating how you will deal with those problems you make it more apparent that you are good at running a business and forecasting problems. That is how you become more convincing when pitching for investment.
8. Use stories, examples and anecdotes to convince investors
One of my favourite sayings for investor pitches is “Facts get forgotten, but stories get repeated.” A good story can be more compelling than the most convincing numbers. Yet, too many investor pitches fail to harness the power of a compelling story.
A good story in your investor pitch can be like one of those multi-tools. It can do many jobs at once. A powerful investor pitch story can help bring to life a complex idea. An investor story can make it easy for someone to understand what drives your customers and a strong story will help the listener. A good story can show how you deal with adversity.
9. Convince by showing you have a clear plan for creating value
When you are building a business you are on a journey. And a journey has many steps. For that journey to be successful, you want a plan. And a plan always has certain features.:
a. Your plan has a clear destination
b. Your plan has your first steps mapped out
c. Your plan foresees the obstacles you might face
d. Your plan has measurable waypoints
If you can describe these four aspects of your business clearly, it’s much more likely that you will be able to convince investors.
10. Make it easy for your investor to tell your story and convince others
For you to be successful in raising money from investors, your investor needs to convince other people. These may be investor colleagues, these may be members of the investor committee, it may be external advisors. They may need to present to the board. Whoever it is, you need to equip your investor with the tools to pitch for you.
How do you convince investors?
The tools above will all help.
- Your investment story must be simple.
- Your investment story must be engaging.
- You need to include case studies and anecdotes to bring it to life.
With these characteristics your investor will find it much easier to convince others.
Of course, not everything about convincing investors is easy. If it were, our firm would not exist. Every day we help firms and funds put together compelling investment stories, pitch books and investor meetings. With advice and coaching we add value by making investor pitches compelling. We’ve been transforming investor pitches for 15 years and we do it for some of the most successful businesses in the world.
If you want help convincing investors to invest in your fund or your business, then get in touch. Call Louise Angus, our client services director for a no obligation chat about how we can add value to your fundraising.
How to prepare a convincing investor pitch
Contact us for a chat about how we can help you with your presenting.
What leaders say about Benjamin Ball Associates
"Essential if you are going to be a spokesperson for your business"
Senior Analyst, Sloane Robinson
"Being an effective communicator is essential to get your stock ideas across. This course is exactly what's needed to help you do just that!"
CEO, Blast! Films
“Our investment in the coaching has paid for itself many times over.”
Corporate Finance House
“You address 95% of the issues in a quarter of the time of your competitor.”
“Good insight and a great toolbox to improve on my presentations and delivery of messages to not only boards, analysts and shareholders but to all audiences”
“We had a good story to tell, but you helped us deliver it more coherently and more positively.”
CEO, IPSO Ventures
“Ben did a great job on our presentation. He transformed an ordinary set of slides into a great presentation with a clear message. Would definitely use him again and recommend him highly.”
“Moved our presentation into a different league and undoubtedly improved the outcome and offer we received.”
Head of IR, Equinox
“A fantastic job reviewing and transforming our marketing material and helping us get our message across with clarity to potential investors.”