Every business needs funding, whether at the startup stage or later on. Pitching your business to potential investors and lenders is an important step in seeking and securing funds to invest in your business. 

This is one of the topics I will be presenting at the African Union MSME forum, themed “Fostering financial empowerment and educational innovations for African startups and MSMEs” today.

As a startup, your pitch will require a detailed business plan with financial projections for at least five years, and if the business is already in existence you will need to present the business financial reports, showing the business’s historical performance and financial projections. 

As a business consultant, when clients request assistance in developing a business plan, the first thing we normally work on is a business model canvas, which is a summarised and shorter version of a business plan (we will explain the BMC in detail in the next article). 

It is essential to understand and explore different options for raising funds and how to pitch your business to these options. So, what are some of the options available in the market? We have traditional funders (banks), modern funders (online lenders), government grants, and angel
investors. 

Pitching your business to the
different funding parties requires understanding the needs of each funder. How banks, and angel investors, evaluate your business plan, and the questions they tend to ask, the investment criteria and the information critical to their final decision may
differ, even though the overall focus is on the profitability and sustainability of the business.

Traditional funders may place an emphasis on the financial aspects of your business pitch, analysing financial stability, cash flow, liquidity, and the business’s ability to meet its obligations (debt). 

While, investors are more focused on the business scalability, return on investment, and market opportunities, meaning more emphasis on both the market and finance aspects. 

Additionally, there is a consideration for “investor fit”. Therefore, it is important to tailor your business
pitch to the needs of the audience.

After understanding these different options of funders, we then have to consider the advantages and disadvantages of these funding
options, as illustrated in the below
table.

More will be covered in the next article, be on the lookout…

*Mekupi Kambatuku is a Managing Consultant at Simpli Business Advisory, and can be reached at admin@simpliadvisory.com