By: Areej Shah
“An investor pitch meeting is similar to a blind date. In most cases you quickly realize if you’re going to spend the rest of your days with the person sitting next to you.” Jay Samit, investor, president of ooVoo.
The high probability of an unsuccessful blind date is much like the depressingly high statistic of fruitless investor pitches. Unlike a blind date, in an investor pitch meeting, the power dynamics are clearly off-balance. The onus is on the entrepreneur to explicitly state their value proposition, defend their business idea, and convince beyond doubt that their venture will succeed. Even a slight error may sour the mood of the meeting and destroy your chances at a potential ‘second date,’ not to mention the potential for an investment. Therefore, a careful analysis of what not to do when communicating your idea to investors will help you craft and deliver the most effective pitch.
1. Boring your investors with dry, tech-heavy slides
Often entrepreneurs find themselves in a position of information overload. They have extensive knowledge about the business idea and it becomes seemingly difficult to condense the details into a compelling investment case. Nevertheless it is vital for entrepreneurs to create a concise and informative outline of their vision. Venture capitalists and angel investors may sit through numerous business presentations throughout the day, making it crucial to keep them engaged in the presentation. Therefore, entrepreneurs need to ensure that they never repeat themselves, avoid technical jargon and always address the basic business idea clearly and confidently.
2. Being too attached to the business plan
Business founders are often so optimistic about their ideas that they may not acknowledge criticism offered by mentors and peers. Being non-coachable and failing to examine the alternatives restricts entrepreneurs from exploring the wide array of modifications that could potentially lead to an improved business idea. There is no place for defensiveness or cockiness in investor presentations. Instead, there is a need to “leave pride at the door” and remain open and adaptable to investors’ suggestions.
3. Being a weak presenter
It is self-explanatory that the stronger and more confident your delivery, the better the pitch. However, if you are a naturally weak presenter and have not seen much improvement with pitching workshops and other resources, it may be time to find someone from your team who can do the job instead. Unfortunately, some founders are so attached to their start-ups that they refuse to give up the pitching role to stronger candidates. This results in weak presentations and lowers the chances being taken seriously by investors. Since the fate of the business idea rests in getting enough funding to push the product through the commercialization path, founders must be strong enough to allow their team members to take the reins in pitch meetings.
4. Overlooking an exit strategy for investors
Investors are in the business of financing start-ups for the sole reason of making a profit when cashing out their ownership. They need to visualize their position in the long run to access the stability needed to manage their investment. Therefore, presenting clear exit strategies provide investors with an idea as to the strategic direction of the company. If you don’t have a well-thought out exit-strategy for your investors, this will be a decisive factor in whether they invest. You need to outline whether you intend for the business to go public or be acquired in future. Failure to provide such future-focused information may result in reduced investor interest.
5. Not being prepared for the Q&A session
Q&A sessions are meant to clarify investor concerns that arise during the pitch. If you are unable come up with a well thought response, this can be absolutely detrimental to your first impression. Instead, prepare for anticipated questions by creating supplementary slides that will help explain your answers; this will emphasize the feasibility of your business and increase investor confidence in the business plan. Make sure to back up all your assumptions with up to date market research data and clearly cite your sources. If you require help finding and accessing relevant data, RIC Centre offers free market intelligence reports to its clients.
Overall, entrepreneurs must treat investor pitch meetings with the respect they deserve. Aim to avoid the aforementioned five mistakes and you should be well on your way to a successful pitch. Value your investor’s time. Don’t bombard them with technical mumbo jumbo. Remember that your words are not credible without market research data. Be confident but not cocky. Defend your idea without acting defensive. Plan ahead and show the investors what a lucrative future with you looks like. If you need one-on-one help to perfect your pitch, please register for MaRS Pitching to Investors Workshop happening October 13 & 18, 2013.
Areej recently graduated from University of Toronto Mississauga with a specialist degree in Business Administration. She shares her passion for social media marketing by serving as the Communications Intern for RIC Centre. Areej aspires to launch a successful career in the emerging field of business technology management.
The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide a wealth of information based on their personal and professional experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.