What Not To Do When Pitching To Investors (Part 1)

What Not To Do When Pitching To Investors (Part 1)

From Arlene | Posted by YouInc.com - January 30, 2013 at 6:00 pm

I've probably heard thousands of pitches in my career, so by now I've developed a pretty good idea of what works and doesn't when approaching investors. Pitching is an essential skill for any entrepreneur, and today, in the interests of raising the bar, I'm going to focus on what you shouldn't do:

Don't forget to tell investors what's in it for them

Investors are not heartless people (well, not most of them, anyway), but they do tend to be pragmatic ones, and the main reason they're listening to you at all is because there might be something in it for them. So if you're asking them to fork over money, you need to focus on what they're going to get out of it. You need to see your proposal through their eyes. This is absolutely fundamental and yet so often overlooked. Too many people go on and on about how their proposal is going to be a great growth opportunity for them, which is nice, but not all that interesting to the investor. This is business, not a charity. Unless you can make an investor understand why giving you money will be good for them, my advice is: don't quit your day job.

Don't deliver a sermon from the mount

Think of it this way: If you're trying to convince your kid to stick with playing an instrument or learning a language, you're unlikely to get very far by waxing poetic about the intricacies of the knowledge they'll gain, or railing on about how much money and time you've already invested in their education. All that's going to happen is that their eyes will glaze over. You have a far better chance of getting them to see things from your prospective if you focus on all the good things they'll get if they keep at it. Come to think of it, investors aren't really all that much different than kids. They have short attention spans, they like to be entertained, and they tend to warm to people bearing gifts.

Don't be vague

Make sure you have a plan in place and have modeled out what you're going to need. In detail. The number one mistake I see would-be entrepreneurs make is asking for money before they actually know what they need. How much ramp time do you estimate you'll require before you become profitable? How much time and how many resources will you have to put in? Put a dollar figure on absolutely everything. Make it clear exactly what you need and what an investor can expect to get in return. Investors may be dreamers and risk-takers, but they like making money. For them to take a flyer, they need to see numbers.

That's it for today folks, but stay tuned, because I plan to touch on this subject more in the coming days. In the meantime, I'd love to hear your tales from the pitching front.

Tags: arlene dickinson, dickinson, blog, challenges, pitch, start, details

Allaboutyouvideo Judy Whale
January 16, 2013 at 11:03 pm

Awesome advice! Thank you, Arlene. I'm thinking of braving the Dragon's Den next year (still have a few things to work out...including drumming up more courage). :) I have never pitched anything before, but have been watching the Dragon's Den (and another show that we will not mention...;-P) to gather as much info as I can. I DO know what my intro would be, so at least that's a start. :) I also think about what my reaction is when someone tries to get me to buy into their company (commission is great, repeat business, hardly any selling involved, low investment, great return...etc) and no matter what the product is, it has to be something that I can believe in, feel good about encouraging people to buy and something that I, myself, would purchase as a consumer or want my family to buy. That's what I would make sure to have in my pitch. :) I hope that's a good start! :) I believe most investors would want to put their money into something they could actually care about. :)

Stephen Jacura
January 17, 2013 at 5:33 pm

Thank you, Arlene, for answering two questions that I've always had, but did not know whom to ask.

Carmina Young
January 24, 2013 at 1:04 am

I am preparing my business plan to apply for a small loan. This is very valuable information.

Esther Trklja
January 25, 2013 at 8:30 pm

Same strategy I used when I was revamping my resume. I painstakingly looked at every single line of the resume and asked myself, "what's in it for them?". Otherwise, the employer looks at the information and says, "So what? How do I make money?" (a la Kevin O'Leary). Same strategy for pitching, I think.

Tish Heath
April 6, 2013 at 6:25 pm

I find sincerity is key.  Investors are people, not dollars.  Untruth is disgusting to humans.  If I don't have a clean pitch, I don't pitch it. 

Jacqueline Smith
April 14, 2013 at 1:44 am

Thanks Arlene....great advice.

Because we have often been living and breathing our business plans for a long time.....it's a good reminder that others haven't been.  What seems obvious to us may not be so obvious to others.

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