It was Daymond John, CEO of FUBU and an investor on the ABC reality TV series “Shark Tank,” who famously said, “An entrepreneur must pitch a potential investor for what the company is worth as well as sell the dream on how much of a profit can be made.”
But no amount of passion from an entrepreneur, or even an established business owner, can fully quell the nerves that come with pitching before a group of investors. Everything from the length of the PowerPoint presentation to what you wear is heavily scrutinized, and there is no guarantee that every business will receive funding on the first pitch.
Practice makes perfect when it comes to pitching, so before you go in for the final presentation, focus on prepping yourself in the following four areas.
Keep it short and sweet
This applies to every aspect of your presentation. From your elevator pitch — one minute, maximum — to the PowerPoint presentation you’ve prepared. While it’s important to get investors to notice the problems your business can solve or the needs it will meet, adding tons of detail clutters and hurries the pitch. Keep it simple, clean and straight to the point.
As well-known entrepreneur and “Shark Tank” investor Mark Cuban told The Washington Post, “When it comes to business, there is a simple scorecard. Are you making money or are you not making money? Are you succeeding or are you not? So when you go to raise money, always, always catch yourself and eliminate the backstory.”
Don’t over-disclose upfront
Knowing the financial figures behind your business is important, but there’s no need to share all of your exact numbers at the outset. Instead, show a commitment to metrics and analytics.
Investor Mark Cohen says that while measuring metrics is not easy to do, it’s important to believe in the value of what the metrics will reveal and be willing to adapt to what is uncovered.
Be specific about your strategies
As mentioned before, entrepreneurs need to be in tune with the problem their business is solving or the needs it is meeting. Prep your strategies beforehand and know what you’re working on today and how you anticipate growth in the future. It’s also important to know your market and customer base and what they think of the product or service — specifically if they recognize that your company is solving a problem for them that they would be willing to pay for.
The average window for a pitch meeting with investors is about 10 to 15 minutes. So once you’ve confidently and passionately knocked out the “three magical P’s,” which according to investment banker Gary Spirer including people, product and potential, it’s time to ask questions of your own.
What is the investor’s specific investment strategy? How does the investor typically structure investment in a company? Is the investor focused on a particular industry, business size and/or growth rate? How does the investor get involved in the business after an investment?
Remember that once the pitch is over the only bad question to ask is no question. So be sure to grill your potential investors!
Deborah Sweeney is the CEO of MyCorporation.com, a leader in online legal filing services for entrepreneurs and businesses, providing startup bundles that include corporation and LLC formation, registered agent, DBA, and trademark and copyright filing services. For more information, please visit www.mycorporation.com or follow on Twitter at @MyCorporation