There have never been so many options available for raising capital to start or expand a business. I recently had the opportunity to moderate a great webinar on Funding 101 featuring Brian Meece, CEO of RocketHub and Gil Beyda, Founder and Managing Partner at Gencast Ventures, where we covered the basics that every entrepreneur needs to know about funding. In this three-part series, I’ll recap much of the advice that Brian and Gil offered during the session. Part one provided an overview of the different funding options that are out there [link to article]. The entire webinar is also available for on-demand viewing – I encourage you to check out the full webinar for more details and some great stories. In this second part, we offer tips for perfecting your funding pitch.

Your funding pitch is all about how well you can tell your product or service story. Here are some tips to help you craft an effective pitch.

Define the problem and the solution. You need to demonstrate that you really understand the problem: What exactly are you solving? Is it a painful problem? Is it well understood? Is it felt by many people? On the solution side, you want to convey that the market is ready for your solution: How do you solve the problem? What are the alternatives? How is the problem being solved today?

Showcase the team. Investors want to know that the team can execute: Can they create a vision for the company? Do they have domain expertise? Can they inspire others to follow them – whether they are hiring or looking to partner with them – to sell the solution?

Know the competition. Who else is out there solving the problem? What are your competitive advantages? And can you maintain them over time? What market are you going after and how big is it? Many companies when asked about competition during the pitch will say, “Oh, we’re doing something so specific that there is no competition.” The truth is that 90 percent of the time, there is someone else who is trying to solve the problem. They may be doing it in a different way, which is fine, but the investor wants to know that. And if the investor is able to come up with a competitor they’ve heard of and it’s a surprise to you, that will reduce their confidence level in your knowledge of the space.

Understand the financials. How do you make money? What are your revenues? What are your expenses? How do you acquire customers and what does it cost you to acquire those customers? Hopefully your revenue scales faster than your expenses.

Map out the milestones. Assuming that this isn’t the only money you need, you want to show what kind of progress, traction, and de-risking to expect on this investment that will get you to the next level.

Define an exit strategy. This one may be tough to think about because, in some cases, you haven’t even started the business yet. But when you’re building a valuable asset, investors like to look at to whom it will be valuable. So you want to think about that ultimate goal. Is it to have a larger company acquire you? An IPO? Or is it to build a great business that throws off a lot of cash and can operate as a long-lasting, standalone company?

Be engaged and tell a story. Tell folks why you’re doing what you’re doing. What is it that really excites you about this venture that will keep you going through the ups and downs of the road ahead? Then talk about the opportunity. For example, if you’re in a pre-sales crowdfunding campaign, talk about the ability to pre-order, maybe at a lower cost or to be the first on the block. But also sell why the funder should partake in your offer. It’s important to know the numbers, your strategy, where you’re headed, and how you’re going to get there – but you need to wrap it in a great story.

Be visual. Visual elements such as video are very important, especially in the world of crowdfunding but also increasingly in the investor model. They don’t need to be expensively produced and they don’t have to be super-slick, but they do need to be authentic and credible. You don’t need to spend a lot of money, but you should spend a lot of brain power on crafting your story in a visual way.

Plan. Even if investors have some operating experience in the space, they’re looking for the entrepreneur to be the expert. They need to be confident that this is the team to execute on the opportunity. That confidence doesn’t come from being a great speaker or having flashy slides; it comes from being prepared. Being prepared means not only knowing the product you want to build, but also knowing the market you want to go after, how to go after that market, the resources you’ll need, and the competitive landscape. We all want to get excited about the business, but that needs to be tempered by the reality of the business. Investors know there will be hurdles to overcome, but that doesn’t mean it’s not a good business. It’s much better to know the hurdles in advance than to be surprised by them – that’s when you trip. And that requires planning.

Focus on getting to the second meeting. You want to get the investor excited about the team and the opportunity, and interested enough to want to learn more. Building relationships with investors is important. Even if there isn’t a fit with this particular investor at this time, establishing a longer-term relationship can be beneficial.

Next: What do you do when the answer is “No”?