October 16, 2015
For even the most bootstrapped of startups – financed only on credit card debt, ambition, and determination – there ultimately comes a time when in order to take the company to the next level, the assistance of outside investors will be required. Pitching to a group of angel or VC investors can be an extremely nerve-wracking experience for aspiring entrepreneurs, as they are forced to try and convey the value of their business in an extremely short period of time, and a bad first impression can be catastrophic. With that in mind, there are a few helpful tips one should keep in mind to help increase the likelihood of success when pitching investors.
1. Stay Away from Overused Buzzwords
Just as almost any hiring manager in the world will be turned off by self-described “ninjas” or “gurus” on a resume, an overeager entrepreneur describing their technology as “disruptive,” or suggesting that their product will be the “Uber for (insert industry here),” is likely not going to be well-received by a group of seasoned investors. Just ask Danny Sullivan from Search Engine Land, who is clearly a fan of the HBO series Silicon Valley.
— Danny Sullivan (@dannysullivan) January 23, 2015
2. Practice and Prep to Avoid a Case of the Jitters
In a recent article here on Tech.Co, technology PR expert Elliot Tomaeno offered several useful tips for calming one’s nerves prior to a pitch presentation. Practicing the pitch in front of an audience, speaking slowly, and avoiding excessive usage of filler words such as “um” or “you know” are among some of the many good insights given. The goal of a pitching investors is to leave them with a lasting impression of the product’s potential, rather than allowing poor presentation to distract their attention.
3. Express Confidence, but Avoid Arrogance
After successfully attracting a new investor via the TV series, Dragons’ Den (the U.K. equivalent of Shark Tank), entrepreneur Kate Castle suggests that, “You need to appear confident without being arrogant.” Confidence can be expressed through posture, tone of voice, and general demeanor. However, bragging too much about the company’s accomplishments or dismissing potential market risks can be interpreted as arrogance, so toe the line with caution.
4. Be Prepared to Pitch Everything in Ten Minutes or Less
According to Caroline Cummings, a co-founder and CEO for two internet companies, an entrepreneur must be prepared to deliver the entirety of their presentation in ten minutes or less when pitching investors, as that is often all the time that their audience will grant them.
Many entrepreneurs crash and burn when delivering their investor pitch—and ramble on and on. There’s nothing more frustrating than being told, “I only need 10 minutes of your time,” and then 20 minutes later you’re still on slide #5.
5. Beware of Overly-Hyping Financial Projections
Unlike publicly-traded companies, private startups have the luxury of using more flexible accounting methods such as EBITDA, an acronym that stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. While such accounting methods can be used to take limited financial information to project astronomical future returns, keep in mind that angel and VC investors are extremely knowledgeable about financial matters. An overly-optimistic projection of future growth and earnings intended to wow investors may ultimately have the opposite effect if investors feel that they are being patronized.
Lastly, before entering a pitch meeting, keep in mind that almost every great entrepreneur failed many times before they succeeded,”Don’t be afraid to fail, be afraid not to try.”
[Image Credit: democonference / Flickr]
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