Having a chat with a stranger about funerals may not be at the forefront of an investors mind when they are getting into a hotel lift. But when that stranger is an entrepreneur who has a stellar business idea to modernise the funeral sector, offer a better service to bereaved families and make money then it is certainly worth listening.
Ed Gallois, chief executive of Funeral Zone – a website which compares funeral directors and gives guidance to the bereaved – says he has used this so-called ‘elevator pitch’ tactic “many times” to attract investor interest. Gallois, who has raised £3m through angel investors, says these pitches – which can take place when an investor or dream client is spotted in an elevator, over social drinks or even on the street – provide an entrepreneur with between 30 seconds and two minutes to get their business idea across.
Pique their interest
“The longer you can speak to an investor about your business the better your chances of piquing their interest,” he explains. “But more often than not you don’t have the luxury of time and need to spark their interest within seconds. To do this you need to describe what your business does in less than five words.
“The simpler and more relatable the concept you can convey the more likely you will get their attention. Tell them what the business is and how it relates to the world around us. If they nod their head then get your phone out and show them your website. If they are still interested then start talking about how you have the best idea, team and metrics.”
Mike Southon, author of The Beermat Entrepreneur, agrees that an elevator pitch should be kept snappy. “Don’t tell them everything about your product. Most people have very short attention spans and can only remember three things you tell them. If you get to ‘golden nugget’ number 50 the investor will have lost the will to live,” he says. “The aim is to win another 15 minutes from the investor at a future date. You just need to get them interested.”
Structure the conversation
Entrepreneurs should focus on the three Ps – Pain, Premise and Proof. “The pain is to identify a difficulty or opportunity in everyday business or life such as people finding cheap taxi fares in city centres. The premise is to explain in simple terms what your business does and how your product and service can solve that issue. Don’t be vague, just get to the point,” Southon states.
“Then you hit them with the proof such as case studies of happy customers or research results. But the less you say the better.” How you say it is also important according to Liz Doig, lead strategist at communications firm Wordtree. “Treat the person like a human not just an audience at a pitch. Speak to them normally and ditch the business speak,” she says.
“Don’t use phrases like ‘solution’ or ‘we are committed to’ because you will sound like you are wet behind the ears. Just get to the point from their point of view. What is this thing? What’s in it for me? Why’s it better than anything else on the market?” It’s not just about you the entrepreneur.
Carol Cheung, Investment Associate at Cambridge Innovation Capital, says: “Yes, I want to know about the entrepreneur and their history. But I also want to know that the rest of their team is credible because I will be backing and working with all of the business,” she explains.
“Aside from a unique idea and clear market opportunity providing this information in an honest, articulate and sincere way is important for me. I can easily tell if someone is being disingenuous!” Cheung, however, says entrepreneurs should not be nervous about approaching her or other investors. “We are very open to receiving elevator pitches,” she says. “We want to hear from you.”