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Home » Top 11 Things Investors Look For In A Fashion Pitch
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Pitching to investors can be one of the most nerve-wracking parts of being an entrepreneur. You wonder if they will like your idea. You wonder if they will like you. But most of all, you wonder if they are going to fund your project or not. The last thing you want to do is come across as an apprentice who hasn’t completed the necessary prep work, possibly risking a deal.
Fortunately, we understand the pressure fashion entrepreneurs go through during the early months of their startups, so we have compiled a list of tips to help you strategize, prepare and present the ideal pitch!
Here’s a brief overview of the Top 11 Things Investors Look for In A Fashion Pitch:
Every attractive sales pitch tells a story. Engaging stories share several common features that you can include into your pitch to capture the attention of your prospects from the start.
A captivating story…
Of course, a good story is not enough, you need to make sure you’re selling something unique! That’s what we’re going to look into in the next section of the post.
Unless you’re fortunate enough to be the only player in your sector of the fashion industry, you’ll need to distinguish your brand and your products from your rivalries to gain competitive advantage.
Market segmentation compares your brand to existing brands in your industry helps you decide who you want to market to. Do you want to serve groups based on price points, product end-users, intermediate clients, or end customers? These are just a few of the market segments to consider. Our post covering Market Segmentation in the Fashion Industry offers additional examples of existing segments fashion entrepreneurs should consider. Once chosen, you’ll be able to form a unique value proposition.
A value proposition describes the product or service your company is providing, how it solves a problem, and ‘why’ customers should choose your business when compared to the value offered by your competitors.
Next, you’ll need to segment your consumer market. Popular methods of segmentation include descriptive, behavioural and psychographic segmentation. Visit our post: Consumer Segmentation in the Fashion Industry to learn more about applying segmentation techniques to reach your target customer.
Forming consumer segments allows brands to develop a unique selling proposition, or, a statement listing features that differentiate your product, not brand, from competitors.
If you have trouble explaining how your brand/product is different than others in your industry, you may want to consider reevaluating your segmentations. Recognizing, practising and communicating your value to investors is necessary for securing a deal. Remember that sometimes it’s the right profiling strategy that makes your product unique.
How quickly you progress and achieve your goals along this journey is reliant on the quality of your onboarded team – their expertise, technical skills, competence, and attitude.
Think about what you want the prospect to take away from your organization’s culture/values and focus on emphasizing those in the presentation. Maybe it is your strong ability to work cohesively as a team, or perhaps it is your diverse set of skills you each bring to the table.
Presenting this information improves your credibility and builds trust among investors who want to see that you can address the consumer’s unique needs with experience. Another element to keep in mind is that investors are always looking for founders who are able to approach the business without relying too much on outsorcing services, so that as the business takes off, it is not limited by too many liabilities such as salaries and recruitment costs.
Ok, if you are ok so far, it’s a really good sing, it means that you already have a lot covered. In the next section we’ll look into a few more tricks to make sure that you are presenting your products and services as painkillers and not vitamins. What do I mean? Read further!
Ensuring your product or service is a painkiller and not a vitamin, starts by understanding the difference between a “nice to have” product and a “need to have” product.
A vitamin is supplementary. While it adds value, it won’t solve a problem and address the pain points experienced by your target customer.
A painkiller is a product that alleviates a critical customer need or problem. If a painkiller is available, customers will wait to purchase a vitamin.
One approach to evaluating your product and value proposition is the Jobs To Be Done theory. The Jobs To Be Done theory is a provides a framework to define and categorize your customer’s needs. It tells us the more jobs a product can help a customer get done, the more valuable that product is in a market.
Assess if your product falls into the vitamin or painkiller category by asking the following questions:
Keep in mind, the JTBD theory isn’t the only framework out there. Learn about alternative business frameworks designed to help you think of products for your target customer in these posts:
The growth-share matrix is a model developed by the Boston Consulting Group designed to compare competitors and various growth opportunities in an industry. When investors look at the BCG Matrix and their current portfolio, they make decisions on if, where, when, and why they should invest their capital.
All products fit into one of four quadrants on the matrix: cash cow, star, dog and question mark.
Ideally, investors want to fund Star products which are expected to grow rapidly and have a high market share. If your segmented market is not expected to grow, but there is a significant degree market share, these are known as cash cows, which can be profitable as well. The identification of your product in one of the four categories will help you apply ideal growth and funding strategies to present to investors. Ideally we all want to be stars, but even qualifying as a question mark pays off, as investors are aware that startup capital is always about taking chances.
Presenting a product that has been through the stages of market testing is a stellar feature to include in your sales pitch. The testing phase gives you a sense of how many consumers are interested in your product. This way, you can evade an expensive and unfortunate customer experience of releasing a product that doesn’t meet their expectations.
You may find that your product is in demand by a different audience than you expected, or for a different purpose than you had anticipated. Aside from the benefit of having access to insightful data, product testing also shows the investor that you made efforts to calculate your ability to sell successfully and ensure the product’s success later on.
Now, let’s talk about how to fund your market research.
Crowdfunding is a way to raise money from a large group of people by pooling together their individual investments. It is an effective tool to gauge market readiness for your product while raising funds contributed by interested parties. If your responses are favourable and you’ve raised a statistically significant amount of funds, there is a good chance there is a market for your products. Interested in other ways to affordably fund your business? Check out this post: 5 Steps to Starting a Digital Business with Little or No Money.
Every fashion entrepreneur needs to be familiar with the basics of accounting. Your company will record plentiful transactions over time and these transactions reflect your financial status. As your business grows, you’ll need to make budget forecasts and cashflow predictions.
The Return on Net Assets (RONA) is a measure of financial performance of a company which considers their use of assets. Higher RONA means that the company is utilizing its assets and working capital efficiently. It is also used by investors to determine how well management is currently utilizing assets. Investors use financial equations like these to assist in their funding decision.
If simply the word “accounting” scares you, don’t worry, we got you covered, here’s a post on the top 5 accounting skills you need to hone as a fashion entrepreneur.
Crafting a memorable brand is no longer optional, it’s a necessity!
As business leaders, our job is to distinctly position and message our company, products and services in a way that distinguishes us from competitors and effectively resonates with our buyer personas.
Your brand should describe the problems your customers face, guide them to the solutions you provide, and show the results your solutions bring.
The visual components of brand identity are important as well Logos, color codes, shapes, visuals, fonts, and icons all play an important role of establishing a brand customers will come back to.
We live in an era of rapid globalization and the emergence of new technology that have combined to upend the business environment and give many entrepreneurs a sense of unease. Certainly, the need for product adaptability has never been greater.
Investors want to see a pragmatic plan that is adaptable to market fluctuations and demonstrates a logical approach to attaining quantifiable goals when faced with adversity.
Customer Acquisition Cost is the best approximation of the total cost of acquiring a new customer. It generally equals operating expenses like marketing costs, the salary of your marketing employees, the costs of your salespeople, divided by the number of customers acquired over a period. Why does knowing your C.A.C matter? It’s a useful number to help you calibrate your investment and make sure that you’re making the right decisions for your growth. Put simply, if your customer acquisition cost is greater than your revenue for a long enough time, you’ll go out of business. This is why investors prefer to have a detailed report of these transactions.
Fashion businesses must come to terms with the fact that distrusting consumers expect complete transparency across the value chain. The question is not“ should businesses adopt transparency?”, but “why is the transparency so important?” Transparency is the disclosure of data relating to all practices and stakeholders, to have a comprehensive and truthful image of the environmental and ethical impact of a product. Traceability allows you to track products from source to the consumer which improves the integrity and minimizes product mislabelling. The secretive nature surrounding a fashion company’s source of partnerships, historically, has been regarded as a primary force for maintaining and preserving competitive advantage. Now, honesty and transparency are considered to be a major value add that investors are looking out for.
If you are interested in the topic of sustainability, we have a lot of interesting research articles on this topic. Here’s one for instance.
Woo hoo! We covered the top 11 features investors are looking for in a fashion pitch. The more you practice implementing these into your presentation, the more comfortable you will feel come time to meet with your potential investors.
Always remember to…
Hayley Veal is a passionate, cross-functional, and results-driven professional with an extensive background of creative marketing experience in digital presence, brand development, and customer relationship management. She has worked with various types of organizations, ranging from financial and consulting firms to non-profit organizations.
As an honors graduate from the W.P. Carey School of Business at Arizona State University, Hayley is working towards her MBA and currently developing an entrepreneurial startup that utilizes geospatial technology to introduce economic prosperity opportunities for communities in need.
Her visionary perspective has earned her opportunities to take on both national and international projects, such as financial consulting campaigns and sustainable business initiatives. Hayley’s driving force in life is helping clients innovatively merge their financial and creative realms to optimize value creation for their own businesses.
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