A Guide to Pitching Practices for FinTech Companies: How to Stand Out

Digital-first FinTech companies are disrupting traditional financial services models. The number of FinTech start-ups continues to grow rapidly, with new players entering the market on a regular basis.

As a result, banks, investment groups, and other financial institutions are exploring ways to partner with these digital disruptors to benefit their customers while also staying ahead of the curve.

In this article, we’ll share insights on the importance of pitching practices as a part of investor and investee growth strategy, explain why they matter, and provide tips on how you can implement them in your organization.

Why Pitching Practices Matter for FinTech Companies

FinTech companies are in fierce competition for investment in an increasingly crowded space. As such, investors are looking for ways to move more quickly and efficiently to find the best companies to back.

In November 2022, BDO had the honour of attending this year’s Africa FinTech Summit (AFTS) in Cape Town. AFTS is a vibrant community of FinTech entrepreneurs, investors, regulators, and everyone in between working together to solve the largest financial issues of our time.

One of the ways that FinTech companies can accelerate their growth is through strategic partnerships with incumbent financial institutions.

For digital-first FinTech companies, strategic partnership opportunities are often initiated through pitching practices, which are designed to help FinTech start-ups showcase their value proposition, gain visibility, and grow their customer base.

These pitching practices can be an important tool for companies in the FinTech space due to their critical role in communicating a company’s value proposition, generating excitement around the product/service, and helping potential partners understand the ROI potential of the company’s offering.

Practice Makes Pitch Perfect: 

When done right, pitching practices are a chance for you and your team to put your best foot forward to potential investors, partnerships, and customers. They’re also an opportunity to get feedback on your product and to show your expertise in the space. During the pitching process, you’ll have the opportunity to define your go-to-market strategy, refine your product positioning and messaging, and develop the skill set you need to be successful going forward and show potential investors that you have done your due diligence because at the end of the day – investors want to know “what’s in it for me?”.

Define the Skill Set You Want to Develop

The first step in the pitching process is to define the skill sets you want to develop. By thinking about what you want to get out of the exercise, you’ll be more likely to be successful in the long run. A good place to start is by thinking about the types of investors who might be interested in your company. In this very important step, you will need to consider your branding for the pitch, your presentation style and, if need be, a coach to assist with the right tone in presenting your pitch.

Financial Due Diligence: 

Before you put your company finances into action, you need to understand its due diligence and how to do it correctly. “Due Diligence Meaning: Due Diligence is a process that involves risk and compliance check, conducting an investigation, review, or audit to verify facts and information about a particular subject.” (LexisNexis definition)

The financial due diligence of a FinTech start-up company is a careful and thorough examination of the company's business plan, financial statements, risk assessments and other relevant documents. The goal of this process is to ensure that the investor has all available information so that he or she can make an informed decision about whether to invest in the company or not.

Investors conduct financial due diligence before deciding to invest in a start-up. The Venture Capitalists (VCs) must make sure that:

  • the historical financial information is materially correct;
  • the assumptions in the forecasted period are reasonable and supported by relevant evidence.

Also, the investors would want to know:

  • what systems are in use or required;
  • who is the team;
  • what controls, and accounting policies does the start-up have or require.

The investor would decide to invest if he has reasonable grounds to believe that the project is feasible and will deliver adequate returns (answering that “what’s in it for me” question).

Therefore, to convince them, the start-up must have a robust financial business plan. It is an excellent indicator of the management's ability to drive the business to success.

When preparing and presenting the financial model for financial due diligence: 

  • Keep record of your hypotheses and assumptions. It will make the model easy to read and follow your logic for those not involved in the business. This means that your pitch needs to include the day to day running costs over the next few years.
  • Choose transparent format and keep it simple.
  • Unit Economics – What is the profitability or contribution margin per customer or per unit? This helps the investors to understand the amount of time it would take to start seeing a return on their investment with you.
  • Do not plan too far ahead: 2- 5 years is feasible. The industry changes fast, and even three years is a very "distant" prospect.
  • Use the correct currency: if your customers or investors are in the Eurozone or the UK, use € or £, not Rands or $.
  • Even if your start-up is at an early stage, and you don’t have traction yet, you still have things to put in order and prepare your start-up for the due diligence procedure:
  • Have your reporting package with historic information ready, tidy, and straightforward.
  • Have your 24-36 month forecast financial data to support your business's required funding and valuation.

Try to keep your finances in order from the very beginning, and keep in mind these simple tips for preparing a financial model and maintaining financial reporting. Having all this will help you easily undergo due diligence and build strategically plan.

This is where outsourcing comes in.

Outsourcing your finance FinTech due diligence for pitching to investors is important.

The reason why you need to outsource your finance FinTech due diligence for pitching to investors is that it will save you time and money and allow you to focus on what’s really important.

If you don’t have the right team in place, it can be difficult to get a good idea of how your business will perform. You may also find that some of the information that should be included in this report is missing or incomplete.

This will lead to problems with investors as they try and work out whether or not they want to invest their money in your company. It could also mean that you miss out on opportunities because other companies are getting ahead of you by having a better understanding of how things work in the industry

Showcase Your Product’s Unique Value Proposition

Another key benefit of pitching practices is the chance to showcase your product’s unique value proposition. Investors and partners want to know why your company is different from your competitors and how it can solve customers’ pain points. You should do a competitor analysis to understand your potential market segment that you could achieve over time.

During the pitching process, you’ll have the opportunity to clearly outline your product’s value proposition and demonstrate your expertise in the space.

Pitching practices are an important way to accomplish these goals. By participating in pitching practices, you’ll get valuable experience in front of investors, partners, and customers, while also having the chance to clearly communicate your value proposition and product vision.

By implementing these practices, you’ll equip your organisation for future growth, accelerate your go-to-market strategy, and increase the likelihood that you’ll find strategic partnerships that accelerate growth.

When you're raising capital, it's important to have a strong foundation in your business model and financials. But that doesn't mean you have to do it all yourself—you should be able to focus on other aspects of your company and let the experts take care of the heavy lifting.

Remember, you don’t always have to do it alone. We’re here to help.

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