Being an angel investor is pretty amazing. You’re constantly learning about new businesses and meeting driven entrepreneurs willing to risk everything to follow their dreams. You’re pulling for them, and you hope to be part of their journey in reaching success. That’s why it’s also heartbreaking when you see an entrepreneur make a misstep because you know how much is at stake!
If you can believe it, I’ve seen entrepreneurs pitch and never once mention their own backgrounds … when they are the most important driver of the business! I’ve also seen entrepreneurs finish pitching, leave the room, and then hear my angel investor colleagues say out loud that they still don’t know what the company does.
These are avoidable scenarios. Whether you’re pitching to individual angel investors or a tank of “Sharks” on TV, here are some DO’s and DON’Ts entrepreneurs should keep in mind during their pitch to increase their chances of success.
1. Explain your business model and exactly how you make money. This includes addressing pricing, costs, and margins. Your investors need to understand the economics of solving this problem or serving a need.
2. Explain why YOU are the best team to make this happen. Investors want to know your background and areas of expertise. We need to understand why we would bet on you vs. any other players in the space.
3. Address your competitive edge. That can include intellectual property, patent protection, and exclusive relationships. We need to understand what prevents others from replicating what you’re doing.
4. Talk about your long-term vision for the company. This includes growth plans for future products and geographic markets. If you’re raising money, we also need to know the terms and your “exit strategy” for return on capital.
5. Explain how your business scales. We want to know that this is more than just a niche opportunity. Describe how you would grow across a large customer base in various geographies while making the most of limited resources. And explain what your sales and marketing plan is for acquiring customers.
1. Launch into a long story before you say what you do. So don’t start by talking about the customer’s problem, the market, or your team. If you don’t tell us what you do first, you’ve already lost our attention.
2. Forget to address any relevant legal issues and risks. We would never want to be blindsided by a government action or customer lawsuit. Help us understand the potential risks and how you’re addressing them.
3. Stretch the truth! Be honest and authentic. Support your claims with facts, research, and data, and independently measure your results. If something sounds too good to be true to us, we know it probably is!
4. Forget to address seasonality or cyclicality of your product or industry. We need to understandthe volatility of sales and customer behavior so that we aren’t surprised byunexpected changes in results.
5. Forget to show passion and deliver a great presentation! It’s all about the entrepreneur after all, and we want to believe in you! Ideas are a dime a dozen, but a dynamic entrepreneur who knows how to execute is pure gold!