Use money wisely: 6 key signals startups need to focus on when pitching
May 23, 2023
Are you able to use money wisely? An important fact for investors.
Demonstrate your ability to use money wisely is crucial when pitching your startup to potential investors.
It shows that you understand the value of every dollar and have a solid plan to grow your business while maximizing profitability.
While pitching your startup, investors assess your financial management proficiency. Indeed, investors want to be sure that their money does not go into empty pockets.
To gauge your agility in using money wisely, we present in this articles 6 main signals that startups must pay attention to:
1. Past Achievements and Wins
One of the best ways to demonstrate your ability to use money tightly is by highlighting past achievements and wins.
Discuss how you have used resources efficiently in the past to achieve specific goals, such as increasing revenue, improving customer retention, or reducing costs. Be specific about the actions you took and the results you have achieved, including any metrics or data that support your claims.
2. Clear Next Milestones
To prove your financial dexterity, you need to have a clear understanding of your next milestones. Explain the specific goals you plan to achieve with the funds you raise and how you plan to achieve them.
This shows investors that you have a well-thought-out roadmap for growth and that you understand how to prioritize resources to achieve your objectives.
3. Smart Customer Acquisition and Product Development Strategy
Another signal to attest your ability to use money wisely is having a smart customer acquisition and product development strategy.
Explain your strategy for acquiring customers and how you optimize your CAC (customer acquisition cost). Also, discuss how you invest on your product and optimize its related expenses. Your tactics will provide indicators of effectiveness to investors.
4. Sizing the Funding Needs Properly
Investors want to see that you have given enough thought to your financial needs. Investors are reassured if you have a good understanding of how much money you need to achieve your goals. Be specific about how much you need and why.
5. Adequate Plans to Use the Funds of the Current Round
Having adequate plans to use funds from the current cycle correlates with the ability to weigh the funding needs.
It’s also essential to demonstrate your ability to use money wisely.
Explain how you plan to allocate the funds you raise and how they will be used to achieve specific goals. Provide realistic financial projections that support your funding request. This shows investors that you have a clear plan for spending efficiently and effectively.
6. Profitable Fundraising Returns for Both Parties
Finally, it is essential to demonstrate that you understand the importance of profitable fundraising returns for both parties.
Startups should put themselves in the shoes of the investors and think about the future payback you will offer to investors.
Keep in mind that investors will be eager to invest in your startup if your business will offer a level of ROI (return on investment) matching their expectations and if the different exit scenarios will meet their investment strategy. At the same time, it should be beneficial for the startup.
Assessing the future payback for investors shows investors that you are committed to building a sustainable and profitable business that benefits both parties, not only you.
In conclusion, convincing you have the ability to use money wisely is critical when pitching your startup to investors. The 6 key signals cited above shouldn’t be underestimate. They are among the key decision factors to close the deal and raise the funds you need to grow your business.
Our team of experts can help you analyze the strategic signals investors care about before investing in your startup. Plus, with our extensive network of VCs, we can help you connect with potential investors who are interested in your industry and vision.
Need help? consult our experts today and secure your fundraising.