Pitching to Investors

1. Less is always more.

An elevator pitch is vital. Verbose presentations and lengthy explanations will not impress
investors, and most likely will turn them off. Present your business in a manner that's short,
sweet and to the point. Investors need to be confident that your business will attract and retain
customers. If they don't grasp your concept in a short time span, they may presume that
customers won't understand it either.
2. Never hypothesize. Execute, execute, execute.
Inspire confidence with facts, not fiction. Most investors seek out low-risk businesses with
proven managers that are as close to guarantees as possible. A company with cash flow, a track
record and real-world experience has a better chance of getting investors than a business plan
forecasting large returns. Find ways to test your business's viability on a shoestring budget, and
turn your idea into a functional business before you seek investment.
3. Leave the hockey sticks on the ice.
Excite investors about your big picture, but be reasonable and responsible. Avoid hockey stick
projections. Respectable investors will not take you seriously if you present them with
nonsensical financial graphs that claim your company's revenues will grow from $100,000 to
$50 million in three years. Show investors that you have a grasp on reality with three versions
of financial projections: best case, moderate case and worst case. Base each of these models on
facts, past and present performance data, industry and competitor analyses and a series of well-
thought-out, defendable assumptions.
4. Learn to love discount stores.
Being cheap is chic. In an age where spending is out of control, you'll need to prove that you
are a fiscally responsible manager who knows how to get the most out of a buck. Give yourself
wiggle room in your operations and marketing budgets, but avoid being excessive. Never ask
for a large salary or big-budget perks. Investors want you to be in a position where everything
is on the line.
5. Rome wasn't built in a day. Your business won't be either.
Investors are wary of funding over-eager businesses that seem destined to bite off more than
they can chew. Before asking for millions of dollars to fund 50 divisions and hundreds of
product lines, prove how well you can create, manage and fulfill demand for a single product.
Demonstrate that your business can crawl before you say it can walk. Perfect your marketing
tactics, sales strategies and operational procedures. Investors appreciate companies with
sustainable step-and-repeat business models that are poised for exponential growth.
Remember, even Google's success is based on a single product.
6. Choose not to be the smartest person in the room.
Know what you know, know what you don't know and find the people who know what you
don't know. Build a team of credible experts. The smartest leaders in the world are those who
surround themselves with smarter people. Investors are funding a management team as much
as they are investing in a great business concept.

www.entrepreneur.com

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 Pitch Tactics I Heard as an Angel Investor

I had the great pleasure of spending a year as a member of the angel investor group Tech Coast
Angels, where I heard numerous pitches from entrepreneurs. During my time there, I discovered
that the best pitches have five elements in common.

1. They connect with the heart.

Pitching is about understanding what the investors are most interested in and developing a
conversation that connects on an emotional level. Tell a story that’s relatable, inspirational and
addresses the marketplace problem you’re solving. Let them see every ounce of the passion that
drives you.
Your passion will differentiate you in their minds because it’s an admirable character trait that
shows promise. It makes a statement that you’re going to make your dreams happen with or
without their help, and that will make them want to be a part of your success story.

2. They connect with the head.

Telling an inspiring story won’t get you far if your idea is still floating in the clouds. It needs to be
firmly planted in the ground where it can grow. You have to prove very quickly that you know
your stuff, or the investors will stop listening.

I once saw a pitch for a waterproof case for iPods. The entrepreneurs utilized fun, attention-
grabbing tactics, but what I remember most was their unique value proposition and business
model, which involved a good sales distribution strategy that allowed faster time to market. They
knew exactly how they wanted to build a company around a product they loved.

Investors want to know why your product solves a problem or is a “must have.” Be ready to
answer all sorts of questions: How large is your market? Who are your competitors? Why is your
product better than the others? What is your customer acquisition strategy? Is there a big enough
market and customer base for the idea? People are often rejected due to overvaluation or the lack
of a competitive advantage, so be careful in those areas.  

3. They don’t mimic a spreadsheet. One of the biggest mistakes I saw in pitches was
incorporating too much data and statistics. You want to include the market size and analysis, but
don’t spend too much time on it. It’s more important that you convey a value-oriented, compelling
and memorable message, so be precise and simple. Don’t come with a 30-slide PowerPoint; use 10
to 12 slides, and make each slide count. A simpler idea is easier to understand and buy into.

4. They have a great team dynamic.

Investors are looking at you and your management team. They know a bad partnership can ruin a
business. Your partners and the team dynamic should help inspire confidence, not raise questions.
If investors sense any friction, they’ll fear your failure. If you have an experienced, seamless team,
it’s easier to win over investors.
I once saw a pitch from a company that had developed a diagnostic device to detect diseases in
women’s reproductive organs. This company had an extensive advisory board supporting the
product, and the CEO had solid experience in taking a company to the next level. The people
behind the product made me want to invest.

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 Elements Investors Look for in Your Funding Pitch

1. High-level summary slide(s). These are one or two opening, preliminary slides that highlight
your business. These slides capture the “essence” of your story. Include the points you would
communicate if asked to distill everything into one or two slides.

2. The problem you’re solving. These can be a couple of perfunctory slides or three, four or more
educational slides, depending on your audience’s sophistication. Convey the nature of the market
opportunity you address with your business or product by highlighting what is “broken” or “not
working.” If possible, scope out the size of the market opportunity. Ideally, these slides make it
clear market participants are spending real dollars for imperfect products that do not adequately
address their needs.

3. Your product. Having set up the problems faced by your customers, the next few slides are all
about YOU. First and foremost, describe your solution, at a high level, for the unmet market
demands described in the preceding slides. Drill in on how your products are differentiated.
Convince your audience you have a better “mouse trap.” You want to make sure these slides leave
no holes in your story or questions unanswered. 

4. Marketing/strategy. Having wowed your audience with your product and business model,
proactively articulate a go-to market strategy. Obviously, the scope of these slides is dependent on
your stage of development but clearly demonstrate you have thought about how to roll out your
product and how to capture market share.

5. Team. If you haven’t already heard this, here it goes. Team, team, team. That’s what investors
are looking for. They are investing in your team, your passion and your dedication. Introduce your
team in a few slides. Highlights your team’s strengths, make it clear they are committed to
building something big and they will be great to work with.

6. Financials/projections. The truth is, unless you are a later-stage company, the numbers in your
projections typically don’t matter. Nonetheless, putting together a set of thoughtful projections on
both the revenue and cost sides enhances your credibility with potential investors.

Moreover, in these slides you can, and should, demonstrate an appreciation of the capital you are
raising and how you intend to deploy it to meet milestones that will be critical for future
fundraising. While your audience may feel projections are premature in assessing the business,
they will appreciate that you understand financial metrics and how to “operate” a business.

7. Tone. When pulling together your presentation, consider the tone you want to convey. Nothing
is more important in determining the right tone for your audience. Be creative. Avoid a dry, mind-
numbing presentation. Always gauge your audience and play to them. At the end of the day,
content is king when it comes to a deck. Layer in creativity with great content, show some
personality and you will have a winning combination.

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 Tips for making the perfect pitch

1. Know your audience "When a customer walks into a store to buy a drill, they don't want a drill,
they want a hole," said Chris Murray, founder of Varda Kreuz Training. "Investors don't want to
hear about what you've got so much as what it will do for them. Focus your pitch on interesting the
investor." Sharí Alexander, founder of the consulting firm Observe Connect Influence, agreed.
Successful entrepreneurs research potential investors and tailor pitches to them, she said. "Do as
much research as possible on your potential investors," she said. "Learn their trigger points. What
gets them excited? What do they do in their free time? Finding an alignment between your
business and their positive triggers will perk up their ears and be more attentive to your pitch."

2. Do your homework To utterly convince any potential investor that you know what you're
doing, you have to know what you're going to say and how you're going to say it, according to
former "Shark Tank" contestant and BareEASE inventor Edna Ma."Practice, practice, practice
your pitch before making it to investors," she said. "Practice with yourself in your car or in front of
a mirror. Practice in front of friends, family and people who will give you real feedback.
Remember, you only get one chance to get it right. Don't squander this opportunity."

3. What problem are you trying to solve? Jeanine Swatton is a tech entrepreneur from the San
Francisco Bay Area whose most current project is an app called FrameMonkey. She has worked
with her fair share of tech start-ups and venture capitalists, and her advice for entrepreneurs is
summed up in a single question. "Answer the question during the pitch, 'What problem are you
trying to solve?' " she said. "It is amazing how entrepreneurs come up with a 'cool idea,' but they
do not tell us what the pain point is —other than the fact that they think it's cool."

4. Tell a story Every entrepreneur should know the numbers behind the product backward and
forward. But when pitching it, that stream of data is more likely to alienate than inspire investors,
said Eric Bergman, author of "Five Steps to Conquer 'Death by PowerPoint.' "So put away the
slides and tell a story. "There is a reason PowerPoint isn't used on programs like 'Shark Tank'—
nobody would watch," Bergman said. "An investor, a customer or an employee must be able to tell
your story to others."

5. Demonstrate your passion A 2003 study conducted by the department of neuroradiology at the
University of Tübingen in Germany reinforced the idea that smiles are contagious. The same can
be said for passion—an essential ingredient of any pitch. "You must effectively communicate
genuine passion and real expertise," said Bruce Bachenheimer, director of the Entrepreneurship
Lab at Pace University. "Investors know that even truly great business ideas are incredibly hard to
successfully execute, so you better convince them you are committed and know what you're doing
if you want their money."

7. Talk up the team Gary Holdren, CEO of Garland Capital Group, said that emphasizing the
great team that you have to deliver your great product can give investors the push they need to pull
out a checkbook. "As an investor, I look for entrepreneurs to emphasize their team as much as the
idea itself," he said. "Business models and go-to-market strategies may change, but I want to know
that the team has what it takes to deliver, and that should come across in a pitch meeting."

8. Act naturallyJerry Jao, CEO of the marketing firm Retention Science, had some simple advice
for entrepreneurs seeking funding from investors: Be yourself. "You need to relax so you can
demonstrate just how knowledgeable you are about the problem you are solving and how excited
you are about your solutions," he said. "Investors are trained to see through an entrepreneur's
'smoke and mirrors,' and they are good judges of character.

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 How to Sell Your Idea in Less Than 3 Minutes

1. The Opportunity

A Rocket Pitch should explain the opportunity you have identified, why you care about it and how
you will overcome a customer’s reluctance to buy from your start-up. To achieve these goals, the
first slide of your Rocket Pitch should answer these questions:

 What problem or opportunity have you identified?

 What is your solution to this problem or how do you plan to capture the opportunity?
 Which customer pain will you alleviate?
 What is your vision of the business and why do you care?

2: The Market

If you can persuade an investor that your start-up is going after a real opportunity, the next
challenge is to make a compelling case that the opportunity is worth a bet. To that end, your
second slide should answer these questions:

 Which group of customers will you target?

 How big is the potential market and how fast is it growing?
 Who is your competition and why will your start-up prevail?

3. The Business Model

Finally, your Rocket Pitch must explain how your start-up will make money. Doing that means not
only explaining how you will generate sales, but also explain the costs of running your business
and how much profit it will generate. To that end, your third Rocket Pitch slide ought to answer
the following questions:

 How much will you charge customers for your product and why will they pay the price? 

 What are the variable and fixed costs of your start-up and how much profit will it generate?
 How many customers can you win over time and why do you think they will come on
board?

The Rocket Pitch cannot answer all an investors’ questions about your start-up but if you do it
right, the investor will want to spend much more time with you to get those answers.

You can save yourself and potential investors a lot of time by being disciplined about giving this
pitch only to those with experience in your industry. If that doesn’t work you can always try
people who don’t know your product, but the odds of winning them over may be less.

A final piece of advice is to practice your Rocket Pitch at least five times in front of different
friends or acquaintances who have experience receiving pitches for investment. Each time, you
practice make sure you revise the Rocket Pitch to respond to their questions and concerns.

By this point, you should be ready to try out your Rocket Pitch on a real potential investor.

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 Dumb Mistakes to Avoid When Pitching To Investors

1. Smelling of Desperation: When you pitch to an investor, don't sound desperate. People like
to invest and be connected to winning projects. If you come off as though this investment is the
only way for your business to move forward, it seems needy and is unattractive to many
investors, and can set you up to be taken advantage of. You'll end up giving away more equity
then you should. --Raoul Davis, A

2. Thinking Only About Money :When pitching to an investor, you're not just pitching your
great idea. A relationship with an investor goes beyond the investment, and it's important to
focus on selling yourself as well as your business plan. --Raul Pla, SimpleWifi and UseABoat

3. Going in Unprepared: Just because you have an idea and you think you need help does not
mean you're ready to raise money. Even if you get an investor interested, nothing will bring the
conversation to a screeching halt quite like not knowing how much you want to raise and what
you'll do with it. The questions are core to justifying the investment. --Jason Evanish, Greenhorn
Connect

  5. What's a Negotiation?: It's rare that an investor will, straight out of the gate, give you
everything you ever wanted. You need to know what you can do with different levels of
investment, and have an idea of what situations are bad enough to walk away from the table. A
pitch to an investor is the start of a negotiation, and you should treat it as such.
--Thursday Bram, Hyper Modern Consulting

7. Being Too Pushy :The investors are there to hear your pitch because they see something in
you and your company. Those who push their product or idea too much cause most investors
to immediately shut down. Be cool and confident, but not like a used-car salesman. You only
have one chance to make a first impression, and don't blow it doing this simple thing --Ashley
Bodi, Business Beware

8. Taking Criticism Personally Most investors are direct and are going to ask you the tough
questions. That's a good thing; it means they're thinking about your idea. Don't take feedback
or tough questions personally or as personal attacks. Answer directly, and if you don't know,
say so. Don't make something up.--Nathan Lustig, Entrustet

9. Putting Down Your Passion :You need more than passion to convince investors. You need a
well-thought-out business plan and a great product. Even with that, though, don't be afraid to
let your passion show through. It'll carry you through the entrepreneurial journey, and
investors know that, so don't try to be all business by hiding that enthusiasm. Display it. It's an
advantage, not a weakness.--Nick Friedman, College Hunks Hauling Junk

10. Promising Too Much : Don't overpromise; go in with what you know, not what you think you
can do. Investors will lose faith in you--that is, if they don't see through you right away.
--Jordan Guernsey, Molding Box

11. 10. Leaving Without the Q&A :Allowing time for questions will naturally create the need to
have a concise and focused presentation, while also allowing the investors to partially guide
the pitch. No matter how organized a pitch is, it may fail to answer certain questions your

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 audience has. Planning for Q&A time allows your pitch to be clear to someone unfamiliar with
your line of work. --John Harthorne, MassChallenge

Ways to protect your idea during a business pitch

 Keep your idea secret before the pitch. Don't show off, brainstorm or disclose information to
anyone prior to the pitch just because you think that your idea is great. Only disclose information
if and when there is a clear need to do so, and the benefits of disclosure clearly outweigh any of
the risks.
 Be cautious when selecting companies to pitch to. Do a background search on potential
clients, contractors or investors. What does their work portfolio look like? Why would they want
to get into business with you? Are they a competitor? Check their reputation before you surrender
any vital information and get referrals and recommendations from others in the industry if
possible.
 Reveal only what you must and nothing more. If you're pitching an idea to a potential client,
give them only the information necessary to convey what your product or service delivers. Don't
bare it all if it's not required to seal the deal. If you're pitching to investors or lenders, you may be
asked to disclose more information, as they will likely want to know more about your idea before
committing financially to it.
 Create and document an extensive paper trail. Record your idea or concepts in writing as
much as possible, and keep detailed notes of discussions and conversations where you're
disclosing information to other parties. The more details you keep in these records, the more useful
they can be if your idea ownership is ever challenged in court.

 Think about confidentiality. If you have to disclose your business secrets to other parties, it
may be worth entering into a non-disclosure agreement with potential investors, contractors,
clients or other associates. Be aware that requesting investors to sign a non-disclosure agreement
may risk you losing an audience, as many will simply not sign it. However, if the dangers of losing
your secrets outweigh the business opportunity, you will need to make a careful decision whether
to pursue it without non-disclosure agreements.