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How to Pitch to Investors
with a Good Story

By the time a new entrant will start their search for investors, they will most likely have already a first description and visualization of their vehicle concept. However, it is an entirely different matter to actually pitch to investors and to convince potential investors of the idea. 

While a comprehensive set of data, plans, schedules and technical insights are without a doubt the key components of the future vehicle, all of these components also need a narrative „coating“ that gives the project a unique touch. In short, every vehicle needs a personal story, a unique image, attached to it in order to convince investors. How to pitch to investors with the story behind your vehicle will be the subject of this article.

How to Pitch to Investors: the Basics Needed for Success

Before reaching out to find investors, there are several vital things a new entrant needs to clarify beforehand. Some of these things encompass basic questions about the project:

  • To what extent is the idea feasible and serializable?
  • Is there an existing target market and are there potential customers?
  • What business model is planned?
  • What are the budgetary expectations?
  • What benefits does the project provide over similar products?
  • How will supply, sales, after-sales networks, etc. be (roughly) established?

Especially during the search for  angel investors and even more during pitching to investors proving this level of credibility and consistency is important for new entrants in particular. These factors can only be met if a strong foundation of verifiable data is available.

This data may (and most likely should) include

  • market research,
  • a business plan,
  • a realistic revenue model,
  • a feasibility study,
  • a comparison with a benchmarking vehicle and
  • basic technical specifications.

 

A Driving Force when Pitching to Investors: USP, Branding and Your Own Conviction

The communication between investors and the new entrant doesn't start at the pitch meeting, but rather at a much earlier stage. Ideally, a new entrant meets investors and industry experts at automotive events, roadshows or similar gatherings.

Such events provide opportunities to generate excitement and curiosity amongst the automotive investing community about the vehicle project. Just by sharing the idea, presenting the vehicle’s USP and inspiring listeners with their own conviction and passion, new entrants can already generate a very favorable first impression already before starting to pitch to investors.

And they should do so: Because any future investor, especially if they should function as the angel investor for the new entrant’s business, should be a reliable partner who believes in the new entrant’s business and vehicle. If investors are not confident in an idea, any future cooperation will prove to be difficult or perhaps even impossible.

In order to lay the groundwork for any potential investor-sponsee partnership, establishing a brand identity is also important. A new entrant does not only plan the development and production of their vehicles, they also create a business identity. That's where branding comes into play when you are planning your pitch to investors.

On the basis of the vehicle's USP and general traits, a brand is created. This brand ideally includes its own name, a logo, a corporate design and a website. This way, all future business communication starts out with a solid foundation and allows for a polished and seamless execution.

 

The Importance of a Good Story when You Pitch to Investors

A successful method of communicating ideas to the public, potential investors and customers alike is through the use of storytelling. Storytelling can serve as a special strategy to create a solid framework that helps with concretizing and unifying a brand's narrative.

Combining the vehicle idea and the personal identity of the new entrant into a well-crafted story requires a lot of consideration and effort. But the result will pay off, as differentiation from the competition is becoming increasingly difficult and the need for a clear brand identity grows ever larger.

With a captivating story, a new entrant gains a both easy and efficient way of communicating their goals and what makes the vehicle unique. Investors will of course also consider public interest in their decisions. If those customers already express interest or appreciation for the vehicle's brand identity, potential investors will be considerably easier to convince.

 

How to Pitch to Potential Investors with the Right Arguments

How to pitch the idea for a big project to Investors? It is certainly not easy. In only a few minutes and with limited visual representation, the entire vehicle idea as well as technical and financial data have to be summarized. However, this exact summary is vital in communicating both the current state and future potential of the new entrant’s automotive vision to the potential investor. To achieve this goal, good preparation is necessary. All relevant data must be systematically collected and organized, and important milestones of the vehicle development need to be determined. When pitching the project, new entrants should be able to sell potential investors on the idea of a successful partnership, a well thought-out and planned project and their return on investment. If the new entrant has communicated their brand beforehand in a smart way, potential investors will already be willing to invest, even before they are formally presented the business idea. All they need are the right arguments to be won over with.

 

Your Investor Pitch Was Successful? So What's Next?

Thorough preparation, preemptively establishing investor connections and communicating effectively and enthusiastically are all challenging on their own – and even more challenging when combined. However, bridging this gap between those efforts will (literally) pay off. It can prove beneficial to consider getting help from outside the new entrant’s own business. This can help them to stay on course and get input from experts. For example, consulting firms that offer these kinds of services – market research, sales opportunities, and more – exist globally. Manufacturing partners are also an essential source of help, as they will provide important basics and automotive experience. Having either consulting firms or manufacturing partners (or even both) backing the project will positively contribute to how an investor perceives a new entrant’s competence. And will therefore make it notably easier to convince investors of the story behind a vehicle.

(1) Please refer to „Article 1: How to Find Investors to Support Your Vision“ for additional information about angel investors.

 

Look for an Angel Investor to Your Project

However, while funding is the key goal behind finding angel investors for your automotive startup, it is not the only trait a new entrant should look for in an investor. As a new player within the automotive market, new entrants not only need to raise funds but also acquire experienced partners required throughout the entire project’s life cycle.

Finding an investor who can mitigate these shortcomings serves as a large stepping stone for entering the automotive world. This specific kind of investor is known as an angel investor.

Angel investors of automotive startups are investors who have already established themselves within the automotive market as recognized players. They are usually accredited investors who have a comprehensive knowledge of the vehicle market as well as an established network of production partners, various suppliers and other private investors.

Similar to venture capitalists, angel investors specifically fund new players in the vehicle market if they have a promising business idea. Unlike venture capitalists however, angel investors are also heavily involved in the development process, as their primary role within the project is not only funding it, but to also bring their connections and experience into the project.

Angel investors provide a huge advantage for any new entrant, as they provide both funding and know-how, two of the major necessities during the early stages of an automotive startup. Thus, any new entrant should attempt to find angel investors for their automotive startup.

 

Where to find angel investors for your automotive startup?

New entrants most commonly refer to investment banks in the search of investors for their automotive startup. These banks serve as mediators between investor and sponsee who take the new entrant’s pitch deck and present it to a portfolio of potential investors. Although it is a seemingly impersonal method, approaching such investment banks is a great first stepping stone for new entrants if they prefer a reliable method for finding investors for an automotive startup at the cost of some interpersonal connections.

And finally, the easiest and most effective method for finding investors for automotive startups is simply: networking. By visiting industry events such as motorshows, vehicle fairs or conferences about mobility issues, a new entrant can very quickly establish a large network of people from the industry. Such a network is vital for anyone who wishes to enter the market – and there is no method more efficient to find production partners, suppliers, peers and of course investors than visiting hubspots for industry members. Leaving a positive impression within such a network will make the market entry considerably easier. It cannot be highlighted enough how fundamentally important networking skills are for a successful market entry: visiting events and conventions and connecting with people should be every new entrant’s top priority.

 

Towards the goal of your automotive startup, one step at a time

A common misconception about investors is that they are a largely passive factor within development: find investors for the automotive startup, pitch the idea, get financing, build the vehicle, see you on release day. And while investors may be varyingly involved in the vehicle’s progress, they are most certainly very involved in the project flow itself. A reasonable investor for your startup always keeps a certain degree of caution towards any project they invest in, particularly if it’s a project by an unknown automotive startup with a long development time to be released in a highly contested market. This means that regardless of how convincing a concept for a new vehicle sounds, no investor would simply provide the entire funding upfront. Instead, they will expect steady updates on the project’s progress, which ensures that everything goes forward as planned. Thus, a new entrant needs to regularly present their status quo via meetings and new project pitches in order to keep up a continued flow of money by their investors. If they are unwilling or unable to do so, investors will over time lose trust in both the new entrant and their vision’s success rate.

 

You've found an angel investor? What's next?

In some aspects, finding investors is very similar to finding other partners for your automotive vision. In both cases, it’s important to convey a sense of reliability and competence, but also be able to create interest and raise passion in a potential partner. A suitable investor will always share commitment to a project that goes beyond profit margins and revenues.

Ultimately, the search for investors is a search for people who fit into the project: they need to share a general interest in the matter at hand and they will be just as invested within the development process of the vehicle as other partners. And that’s the key: investors may not build the vehicle, but they are engaged and involved partners that will join the road and share the dream of realizing an automotive vision.

 

 

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Picture of Sabine Harmuß

Sabine Harmuß

Sabine Harmuß is Manager for Market Intelligence and Product Marketing at Magna’s Complete Vehicles Group. She has been with Magna since 20 years. Sabine held several positions in R&D, Engineering and Marketing/Communications and holds a degree in Engineering and Marketing.

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