Guest
Question: What’s one dumb mistake entrepreneurs should avoid, at all costs, during their first couple of pitches to investors?
Smelling of Desperation
“When you pitch to an investor, don’t sound desperate. People like to invest and be connected to winning projects. If you come off as though this investment is the only way for your business to move forward, it seems needy and is unattractive to many investors, and can sets you up to be taken advantage of. You’ll end up giving away more equity then you should.”
Thinking Only About Money
“When pitching an investor, you’re not just pitching your great idea. A relationship with an investor goes beyond the ROI and it’s important to focus on selling yourself as well as your business plan.”
Going In Unprepared
“Just because you have an idea and you think you need help does not mean you’re ready to raise money. Even if you get an investor interested, nothing will bring the conversation to a screeching halt quite like not knowing how much you want to raise and what you’ll do with it. The questions are core to justifying the investment and showing you’re prepared to lead an institutionally-funded business.”
Introducing the NDA
“Ideas are cheap. Chances are you’ll be laughed out of the meeting if you ask investors to sign an NDA. More important, anyone willing to sign an NDA in a first meeting is probably not sophisticated or serious enough for you to be considering as an investor.”
What’s a Negotiation?
“It’s rare that an investor will, straight out of the gate, give you everything you ever wanted. You need to know what you can do with different levels of investment, and have an idea of what situations are bad enough to walk away from the table. A pitch to an investor is the start of a negotiation and you should treat it as such.”
Being Too Pushy
“The investors are already there to hear your pitch because they see something in you and your company. Those that push their product or idea too much cause most investors to immediately shut down and not hear the rest of the pitch. Be cool and confident, but not like a used car salesman. You only have one chance to make a first impression, and don’t blow it doing this simple thing.”
Eagerly Meeting First
“Many entrepreneurs make the mistake of meeting with their best investor prospects first, yet their pitch only gets better with time. You will achieve your greatest odds by saving the best for last. Note reoccurring questions and concerns after each pitch, and revise your materials accordingly. By the time you get to the big guys, you will be confident and convincing enough to close the deal.”
Taking Criticism Personally
“Most investors are direct and are going to ask you the tough questions. That’s a good thing; it means they’re thinking about your idea. Don’t take feedback our tough questions personally or as personal attacks. Answer directly and if you don’t know, say so. Don’t make something up.”
Putting Down Your Passion
“You need more than passion to convince investors. You need a well thought-out business plan and a great product. Even with that, though, don’t be afraid to let your passion show through. It’ll carry you through the entrepreneurial journey, and investors know that, so don’t try to be all business by hiding that enthusiasm. Display it. It’s an advantage, not a weakness.”
Leaving Without the Q&A
“Allowing time for questions will naturally create the need to have a concise and focused presentation, while also allowing the investors to partially guide the pitch. No matter how organized a pitch is, it may fail to answer certain questions your audience has. Planning for Q&A time allows your pitch to be clear to someone unfamiliar with your line of work.”
Promising Too Much
“Don’t overpromise; go in with what you know, not what you think you can do. Investors will lose faith in you – that is, if they don’t see through you right away.”
Too Diligent About Disruption
“Entrepreneurs often work on ideas in areas they’re passionate about, and along with that can come a sense of religion about changing the way a certain industry works. Disruption is certainly an ideal outcome for a new business, and investors are looking for disruptive ideas, but an entrepreneur that cares more about that disruption than building a sustainable business can often lose sight of the immediate decisions that must be made, even if they steer you away from your original vision.”
Don’t Make Projections, Make Plans
“Don’t put a freaking hockey stick graph in the presentation and expect everyone in the room to “ooh” and “ahh.” Projections are guesses that rarely come true. What’s more impressive is your plan to get there. Investors know that your strategy means a lot more than your pretty pictures.”
Rushing the Pitch
“As nervous as you might be, try to calm down and speak from the heart. Memorization is often the biggest crutch during a presentation. Nerves get the best of us, and we try to rush through the words just to get it over with. Studies have shown that speaking more slowly not only allows the listeners to register what you’re saying, but it also makes you sound more confident and knowledgeable.”
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