Detailed explanations to help you pitch your ecommerce business to a prospective investor.
Running an ecommerce business isn’t much of a challenge if you have enough funding to push it. It doesn’t matter if you can’t think up a strategy to move the business. You can employ a consultant to do that if you have money.
Then again, you may have ideas, but they’ll remain that way if you can’t afford to push them. Conceptions alone don’t move business; you must have the finances to back them.
So, your ecommerce business is stalling not because you’re bad at strategies but because you don’t have enough money. Fortunately, it’s now easier to get funding for your venture. You can secure investor financing to push your ecommerce business with an excellent pitch and presentation.
You’re probably thinking, “how do I get ecommerce investors?” or “how do I prepare an ecommerce investor pitch?” This blog holds the answer to those questions and more.
Getting Ready To Pitch Ecommerce Business To Investors
Pitching your ecommerce business to investors starts with a detailed preparation step. Here’s what you need to do:
Study The Industry
A business pitch is a persuasive argument you present to an investor while convincing them to fund your ecommerce business. Essentially, your goal with a business pitch is to prompt the investor to put their money into your venture.
However, investors are shrewd individuals, so you can’t convince them with half-assed arguments. Primarily, you have to prove financing your business will be a profitable venture. And to do that, you must demonstrate convincing savviness of the industry.
As a result, the first thing you must do while considering an external investment for your business is to study all you can about your industry. The investors will test your business knowledge to ascertain your preparedness to push it forward. And if you can’t pass the test, you’re not ready to get the funding.
Prepare Relevant Data and Facts
Again, investors are not easy to convince. A report by Crunchbase showed global venture funding fell by 6% to $130 billion (Approximately 114 billion GBP) in the first half of 2020. That was the beginning of the increasing reservation in investors’ activities over the years. So to get investors funding, you must do something that’ll move their hands.
The data above is an excellent example of how you’ll use facts to bolster your argument. That said, one of the primary pieces of information you should provide at this stage is relevant data and facts about your ecommerce ventures.
The primary use of the data and facts is to give the investors a quick overview of your business relative to the ecommerce industry. In addition, it gives them an idea of your business’s position in the industry and its aspects that need improvement.
But of course, you should pay more attention to the favourable data and information. Investors will be less willing to invest in ventures that seem very risky. Instead, accentuate the information that portrays your ecommerce business and the industry in a favourable light.
Clean Up Your Business Plan
Your business plan is one of the essential items to arm yourself with as you prepare to pitch your ecommerce business to an investor. Most (if not all ) ecommerce investors in the UK will want to see your business plan before or during your meeting with them.
Consequently, you should never approach an investor without a standard business plan. A business plan is a document containing your venture’s roadmap. It’ll include all fundamental aspects of your business plus how you intend to manage them for the venture’s sustenance and profitability.
If you already have a business plan, review it before any sitdowns with prospective investors. The aim is to remove information that investors may see as red flags. At the same time, remember to add information that may benefit your mission.
Shortlist Your Preferred Investors
This point is where the real work starts as you prepare to pitch your ecommerce business to investors. That’s because, ideally, you should always have all the items mentioned above with you regardless of whether you’re trying to get investments. A serious business person is always aware of their industry, up to date with facts and works with a realistic business plan.
Your real work begins with creating a target list of ecommerce investors in the UK. That brings us to the issue of where you’ll find ecommerce investors. But it’s pretty easy. Shortlisting investors is similar to creating a list of high-priority target markets for your product. You gather leads, sort them in order of priority and then put your marketing strategy to work.
The same applies here. Investors are everywhere; you’re not seeing them because you haven’t looked closely enough.
An excellent place to look for investors is LinkedIn. It’s the go-to platform for things about business and corporate careers. So, you’re sure to find someone willing to listen to your proposal there.
However, a faster option is to source leads from a subscription-based service. Such platforms curate a list of potential investors, and you can go there to access the list for your needs.
Nonetheless, you shouldn’t pick potential investors randomly. Instead, profile each individual you’re considering and ascertain they fit your projections. You must learn as much about potential investors as possible before you meet them. Investors love prospects that do their homework.
Write Your Proposal and Curate Your Pitch Deck
Your presentation and pitch deck are the most critical elements of your ecommerce business proposal to the investor. How well you do with these two will significantly influence the investors’ response.
The proposal entails everything you’re presenting to the investors. It includes your objectives, plans, value proposition, the investors’ contributions and how they’ll benefit from it. It should also describe critical aspects of your business and highlight how you intend to make a profit based on tested and proven business models.
The presentation, on the other hand, is you discussing and explaining your proposal to the potential investors. It includes what you say and how you say it to the investor during the meeting.
Lastly, the pitch deck includes the text and imagery you use to present your proposal. Slides, charts, and images are the primary elements of a great pitch deck. The pitch deck should summarise the information in your proposal into digestible nuggets.
A picture speaks a thousand words, so using imagery is perfect for this effect. But of course, exercise discretion with the type of imagery you’ll use to avoid seeming unprofessional to the investors.
You must get these three elements right as a mistake on one could negatively affect the others. For example, if you make a mistake in your proposal, it’ll reflect during your presentation and pitch deck. So, ensure your submission is concise and direct. Also, make your pitch deck relevant, insightful and exciting.
Meeting And Pitching Your Ecommerce Business to Investors in the UK
The tips above are due diligence you must fulfil before pitching your ecommerce business to investors. After initial groundwork, here’s how to present your ecommerce business to UK investors.
Start With The Problem
The best commodities and ventures address apparent problems. So you want to start by explaining the relevant issues you intend to solve to the investors.
You must make this section as engaging as possible. While you may have the investor’s attention initially, you can lose it quickly if you start too slowly.
A good starting hook would be asking, “Have you ever been in a situation where…?” This opening immediately invites the investor to participate actively in the discussion instead of listening passively. Furthermore, presenting the problem prepares a suitable landing spot for your value proposition.
Introduce Your Products as the Solution
The primary reason you should present the problem first is to create a premise for introducing your business. So you have the situation on the ground, it’s only natural you mention the solution next, and that’s where your ecommerce business comes in.
By presenting your products as viable solutions to the aforementioned problems, you show the investors that there’s a need for what you offer. Essentially, it informs the investors there’s a market that you serve.
Of course, you’ll have to do more for market validation. But introducing your ecommerce business to the investor this way sets a positive tone for the rest of your pitch and presentation.
To present your products as the answer to the stated problems, you must explain how they work. For example, since you run an ecommerce business, you could use an approach that explains how your online store addresses common issues online shoppers face. But, of course, keep it simple and concise; you only have a few minutes to discuss your points.
Remember that to portray your products as viable solutions; you must first identify relevant pressing problems. Then, the solution must fit the problem for the pitch to start on a solid note.
Discuss Your Target Audience and Market Size
By this point, the investors should already have some insights into your target market. But that doesn’t mean you shouldn’t specify it for them. Hence, this part is where you validate your products’ demand.
Here, you should talk about the specific group of people your business serves. This is the best place to use the data and facts you gathered as you prepared to pitch your ecommerce business to the investors. Again, it helps to use infographics and charts to depict complex data.
The goal here is to prove with real numbers that your business has genuine demands and is a sustainable venture. Hence, your investor pitch presentation must achieve that with the necessary examples and figures.
Give a Highlight on Your Business Model
Here is where you discuss the details of your goals. You want to get the investors to put money into your business, and this is where you convince them to do it.
The two aspects below better explain how you can do that quickly.
Include Your Financial Projections
Investors are primarily interested in the profits when they do business with you. So, you must show them when and how they’ll start making their profits. To do that, you must first show them how your company makes money and how much you can make in the short term.
So, you’ll describe your company’s practices for profitability. That will include talking about the profit you get on each unit of goods you sell. Then you’ll move into how you expect the profitability to increase due to additional financing from the investors. Finally, you should also mention the basis for your forecasts.
While you can touch on long-term forecasts here, you should not over-emphasise them. Don’t sit your pitch on projections that are still far from happening. Instead, focus on development happening now, which will continue in the next few months.
Discuss Your Sales Strategy
A part of your profit discussion will include identifying your sales strategy. However, your pitch must show the investors how you get people to patronise your ecommerce business.
You can’t simply quote figures and financial sums without referencing their origins. Therefore, discuss the processes you use to get more market shares for your business. Also, highlight whether it’ll be through content marketing, trade shows or direct sale. Lastly, explain its effectiveness and how the investor’s funding can be beneficial in improving it.
Describe the Competitive Landscape
Almost every Tom, Dick and Harry is into ecommerce businesses now. The increased internet accessibility and simplification of the ecommerce process have encouraged mass participation in the venture. So regardless of the commodities you sell, you’ll always have major competition.
It becomes even more difficult if you’re not the one manufacturing most of your commodity. Then, unless you’re a company-recognised distributor, you’ll have to deal with the manufacturer’s official stores and other resellers like you.
You should notify the investors of factors like this that significantly impact your market shares and overall profitability. Describe how stiff or lax the competition is and how you’re performing compared to the other players in the same industry.
You must do careful research to get accurate information on competitors’ performance. It’ll also help present an industry analysis while pitching your ecommerce business to the investor.
Additionally, you can use this section to disclose insightful information, like the competitors’ weaknesses and the opportunities they present for you. Finally, remember to mention the competition’s strengths, how they can threaten your business and counter plans for them.
Talk About Risks and the Mitigants you Have in Place
In the next slide of your pitch, you should also examine the general market risks common to the business. There’s no realistic business that’s risk-free.
For example, if you’re producing your commodity, you have production risks. Or, if you’re importing goods from overseas, you also have foreign exchange risks to consider.
That said, the typical risks ecommerce businesses face are:
- Legal risks
- Regulatory risks
- Liability risks
- Technological risks
- Political risks
For every risk you mention, you should provide realistic and convincing mitigation measures to them. Of course, you should prepare yourself for many questions in this section.
End with With the Investment Ask
You’ve been pitching your ecommerce business to the investor from the problem phase. Here’s where you tell them how you want them to be involved in your venture.
Of course, the funds you intend to raise for your ecommerce business should amount to a specific sum. So, this is where you spell it out.
However, note that raising too little will result in problems down the line, but raising too much isn’t a good idea either. Hence you should determine the optimum amount necessary to do what you intend for your business.
Tips for Pitching Ecommerce Business to Investors: Best Practices for Positive Reactions
Investors are generally sceptical people who’ll scrutinise every bit of your proposal before putting down the money. Below are some tips to ensure your pitch goes hitch-free.
Practice Your Pitch Before Meeting the Investors
Don’t delude yourself into thinking you’ll have it all under control during your presentation. So, you need to practise. Rehearse your speech, tone, gesticulations, body language and every subtlety an investor might pick up on during your discussion.
Additionally, practising helps you build up confidence which is necessary to deliver a great speech. You can either practice with the mirror or have a friend sit as the judge and point out your mistakes during a mock presentation.
Use a Relatable Story to Make More Convincing Points
Stories paint more explicit pictures than abstract observations, so use one to explain your points to the investors. It’s a good idea to bring in the story while discussing the problem. That’s because, when using narration to describe an issue, you’re doing three things:
- Calling out a set of people who face a common problem
- Describing their pain points
- Explaining their emotional reaction to the situation and the kind of solution they need
These three things create a relatable scenario for the investor to understand what you want to address quickly. And that helps to simplify your tasks going forward with the presentation.
Be Clear On Why You Need The Investment
Don’t run in circles during your presentation. Be clear, concise and articulated. Your goal is to raise funds to improve aspects of your ecommerce business. Be clear on the exact things you intend to use the financing for. It shows the investors you know what you’re doing.
Save Your Ideal Investor for the Last
Typically, the first pitch doesn’t always go very well. You’re probably nervous or not well prepared. Sometimes, you may feel you have all you need only to get to the investors and flop after a few observations from the audience.
The first few pitch presentations will probably not go smoothly. But they’ll allow you to learn and improve. Hence why you should save your ideal investor for the last. That way, you can run through the others on your shortlist and use the lessons learnt along the way to crush the pitch with your ideal investor.
Don’t Evade Questions
No matter how prepared you are, you may face questions you weren’t expecting from the investors. If you don’t know the answer, the default reaction to such situations is to attempt to avoid them.
Don’t do that. Avoiding questions shows a lack of preparedness which investors don’t like. Instead, answer in the best way possible and prepare better for next time.
Seal the Deal with Your Ideal Ecommerce Business Investor
Depending on your preparedness, you may have a hard or easy time during your ecommerce business pitch to investors. Following the above tips should make the process easier for you.
Or you can take the shorter route by talking to an investor you already know is interested in your business. Axis Shift focuses on transforming struggling ecommerce businesses into powerhouses. Contact us today to learn about our investor partnership and how it can benefit you.