Image: BBCThe survey asked 3,000 visitors to the Company Check website to state what they thought was the most important factor in an investment pitch.
With over a third of respondents vouching for it, the business plan was seen overall as the most important thing to get right. It was closely followed by sales, with the founder, the idea, and the economy lagging behind.
What the investors thought
Interestingly, none of the three angel investors that we spoke to put the business plan as the main factor. Rory Curran, an investor in multiple companies, ranked the founder as the most important factor, followed by the idea, and then the business plan in third.In a similar vein, former head of global markets at KPMG, Neil Austin, said that if he was the primary investor, he would look at the idea and the founded and then the business plan. Austin was the only one to explicitly say that the plan could be the most important factor, saying that it would be his main concern if he was not the main investor in a company.
Differing from the other two investors, caravan giant Alfie Best saw cash flow and sales as his highest priorities, though he highlighted the experience of the person being important, particularly when it comes to investing in a completely new business.
TV portrayal of investment
I was struck by the survey results, particularly as the image of investment put across in shows like The Apprentice and Dragons’ Den aligns much more closely with the views of the expert investors than it does with the general public’s views. I would have expected our participants to be more closely aligned with popular media, but you can see the disparity in that the business plan, which they put as the most important factor, doesn’t even feature in The Apprentice until the final episode; all of the other episodes focus on the character and abilities of the contestants.The bottom line is that it’s a problem if the priorities of the entrepreneurs don’t line up with the investors, because a pitch for a perfectly good business could be derailed by a simple mismatch of expectations. Thankfully, the insight that the three investors have given in response to the survey results helps to illuminate practical measures that entrepreneurs can take to make their pitches stronger: the human story.
The scientific benefits of storytelling in pitches
Storytelling in business is not a new idea, in fact, it’s been talked about so much that it’s essentially a cliché at this point. However, there is real scientific evidence to support the notion that your pitches can be improved with storytelling. This aligns with the investors’ emphasis on the founder, because storytelling in a pitch should capture the human element of your story, and why you’re starting this business.Professor Paul Zak, a neuroeconomist at Claremont Graduate University, puts it like this in one article:
“My experiments show that character-driven stories with emotional content result in a better understanding of the key points a speaker wishes to make and enable better recall of these points a week later [...] I advise business people to begin every presentation with a compelling, human-scale story.”
Professor Zak’s neuroeconomics, the personal experiences of the investors that we have spoken to, and the portrayal of investment in the popular media all emphasise the need to be able to present yourself as the founder in a compelling way. This is how you engage with the investors on a deeper level.
Investing in humans
Any person can present good numbers and a strong plan, but not every person that does so will be investable. Why? Because humans are social animals. There are chemical processes in our brains that make us more disposed to wanting to get to know someone and to work with them, and telling a story that promotes empathy and an emotional response in one good way of encouraging people to warm up to you.A business plan is important for the running of a business going forward, but if you want to secure investment in the first place the dry numbers are not enough. Engage with the investors as humans, and show them that you, as the founder, are someone that they want to invest in and work with. Finally, I would just want to encourage you to work hard at communication in order to establish those fruitful business links that will lead to successful relationships in the future.
By Chloe Webber, product and operations, Company Check
