Pitching for money: Fatal flaws #4, #5 and #6
Monday, September 17, 2007/
The art of the pitch? If you want investors to grab the ball, throw accurately and make sure thay know how to catch.
Fatal Flaw #4
Don’t lose your cool!
It’s almost a statement of the obvious. But think about your headspace during this meeting. You believe that your company has worldwide opportunities, you are passionate and you are probably a bit protective of your “baby”.
And no-one likes to be told that their baby is ugly!
Now think about the headspace of the investors. They are busy people and they have the attention span of a gnat. They need to make assessments about you and your team very quickly.
They may decide to throw in a few provocative questions. They may challenge, or even disagree with some of your assessments. Stay calm. Do not get aggressive or defensive.
However you need to back your decisions. After all, you have spent months doing your homework (if you haven’t then this is the very reason why you shouldn’t meet with investors) and you should have most issues sorted. Be confident with your responses.
Ask them why they have a different view. Don’t just accept that what they say is right. Treat the investors with respect, but you know your stuff and let them know that. Remember, they are looking for your reactions. They want to know if you are prepared to listen but they also want to know that you don’t just give in.
The best safeguard is to present before colleagues and friends who will be tough on you. That way you’ve been through the test run before you get in front of investors.
Fatal Flaw #5
People don’t like surprises.
Between setting the appointment with investors and the actual meeting, some aspects of your plan may have changed. We all know that #@*% happens. Just handle it.
You don’t need to worry about minor changes. But where there are changes that will have a substantial impact, then these need to be addressed.
For example… You’ve had to re-cast your financials and the return on investment for the investors is reduced. You don’t have to be Einstein to work out that the investors might want to hear about this.
It is a fatal flaw to wait to announce these sorts of changes at the meeting. Your investors will not be happy. They may very well think that you got the meeting on false pretences. Your credibility goes down the drain.
Get in touch as soon as you are aware of any substantial changes and advise those you are meeting with. In some cases, I have advised entrepreneurs to cancel the meeting. There is no point going ahead unless you are absolutely 100% ready and certain of your case.
Fatal Flaw #6
Execute. Demonstrate how you will build your business.
You may have the best technology in the world but unless you show that you can build both revenue and profit you will not raise capital.
It comes back to basics.
The only way that investors will make money is when you grow the business. The better you explain how you will grow, the better your chance of raising capital.
You want to show how you will:
- Get into new markets.
- Maximise profit.
- Grow your management team.
- Keep on top of competitors.
- Sign up distributors/resellers.
- Build alliances.
A final word…
There is a lot of work to do before you get in front of investors. But it’s worth it. I’ve seen investors do a complete turnaround after presentations – in both directions.
Some companies put a great plan forward but lose the investors because of a very poor pitch. And it also works the other way. I have worked with investors when deciding which companies they should interview. Companies that just barely get to the interview really won the investors with a great presentation.
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