Firm Management

Mark Lyttleton: Steps to Structuring a Funding Pitch

March 14
2:48 PM 2023

Mark Lyttleton is an angel investor and business mentor with more than 30 years of experience investing in both private and public markets. This article will explore the various funding routes open to founders, sharing tips to formulate the perfect pitch.

A founder may have big plans for the future of their business or simply seek additional funding  to support business growth. An injection of capital may be required to boost production or improve cashflow, or for such an ambitious step as taking over another company. Whatever the goals of the business, there are various routes open to business owners.

Whatever type of funding the business seeks, it will need to have a strong business pitch. The more strongly leaders can communicate their business's prospects to potential investors, the more likely the venture is to receive their financial backing.

Structuring a Funding Pitch

The start-up economy generates almost £2.3 trillion in value globally each year. For any start-up, investment is integral to success and growth. However, for an inexperienced entrepreneur, crafting a funding pitch can be an incredibly daunting and bewildering process. 

Fortunately, structuring a presentation is a relatively straightforward process, providing it has the right framework in place and addresses the following factors:

The Problem

Founders need to provide an outline of the gap they have identified in the market. Demonstrating comprehensive knowledge of a market requires an understanding of its key players and the various channels to market.

The Solution

This part of the pitch requires an explanation of what differentiates the business and its product. What does it do that is unique or better than current market offerings, and how will it solve real problems for customers?

The Competition

In this section, the presenter must identify how the customer can solve the same problem in a different way, for example by buying another company's product. At this point, the presentation hinges on demonstrating a detailed understanding of the competitive landscape, illustrating how the business compares.

The Team

Potential investors view the company's team as the driving force behind the business; they are the individuals who are critical to its success. This part of the presentation requires a clear demonstration of their record, expertise and industry knowledge.

The Business Model

Here, the team explains how the business has operated to date and how it has been funded, providing an overview of the business model. It is important to discuss any planned changes to the corporate structure at this point, outlining any significant risks that could impact investors.

The Valuation

A common mistake make by inexperienced entrepreneurs is overvaluing the company without backing that estimate up with evidence. Prospective investors will expect to see profit forecasts, as well as evidence of key milestones the company hit in the past.

The Exit Strategy

Investors will need to see there is a credible route to exit the investment and get their cash back.

Business Funding Options

Different sources of funding include angel investors, venture capital funds, bank loans, crowdfunding and peer-to-peer funding. To weigh up which option is right for them, business owners need to consider a variety of factors, including the size of the company, the nature of its growth plans, how much control they wish to retain and how much money they need.

A small business grant can be a very effective means of obtaining start-up funding, covering expenses like cost of premises, machinery and IT equipment. However, it is important to keep in mind that each grant scheme operates its own application process and most have strict eligibility criteria.

In selecting the right funding avenue, founders need to consider more than just cost and convenience. They also need to weigh up how each solution aligns with their long-term goals for the business, as well as considering the risks involved.

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