Many pitches fail to attract investment for reasons that are not immediately obvious to the entrepreneur. Here are a few…
Having sat through numerous investment pitches, I’ve learnt that it’s not easy. I have the utmost respect for those that try it, let alone those that pull it off. I’m not sure I could… but I do know that the successful ones have certain key factors in common.
Here are some of my takeaways for you budding entrepreneurs that will hopefully up your chances of converting investor interest into hard cash:
- Investors are investing in you and your idea, not your pitch
- You are more important than your idea because:
- A great idea with average people will not attract the smart money…
- …an average idea with exceptional people might
- You are offering an opportunity to invest – it’s not an appeal
- A successful pitch is the beginning, not an end
- A failed pitch is a source of invaluable feedback – tap it
Let’s dissect these a little further:
Investors will only be impressed by your pitch if it demonstrates you have a good idea and the skills to develop it. Sounds pretty obvious, but too many pitches are beautifully and creatively presented whilst lacking real substance. This immediately gets the cynical investor (and many are, like me) thinking that you are compensating for a weakness in yourself or your idea.
You are the most important part of what you are selling. Believe it or not, your idea is secondary to you. The best idea in the world will fall flat if the right people are not there to execute it. Investors know this all too well. “We don’t like your idea but we’d like to work with you” has been heard more than once on Dragons Den.
To show investors that you are worth investing in, there are no short cuts. You need to know your proposition inside out. You need to know the strengths and weaknesses, the markets and the figures, the competition etc. You, or your team, need to show familiarity with all the challenges, all the figures. “I’m not very good with numbers” won’t cut it.
Get the balance right. This is a sales pitch. It’s not life or death. Most pitches fail to attract investment, yours probably will too, at least the first time. Some pitches are just too passionate by half and that can be pretty off-putting to an investor. Understand that a failed pitch can be more useful than a successful one (see below) and approach the whole thing as a great invitation that may be declined.
Don’t tell us how passionate you are. The whole world’s passionate these days. We’ll know if you’re passionate or not without you telling us! And if you do tell us it only suggests that you’re aware of other shortcomings that you’re not going to mention.
What next? If you’re successful, well done! But now the real work starts, and it will involve the extra dimension of other stakeholders who have a piece of your business. If you’re not successful, find out why if at all possible. Many investors will be only too pleased to give you feedback on why they won’t back you. Many will understand the need to be supportively critical and not to pull punches. And that feedback will be crucial to your future.
Consider a failed pitch to be a lucky close shave. The last thing you want is money to support a weak proposition – that will just create more misery for you and the investor. No backing is just a sign that you’ve got more work to be done.
So there are my thoughts on this topical subject. They are not exhaustive and not absolute. And feel free to make contact if you need more input…
Tags: entrepreneur, investment, pitching, startup