Are you ready to pitch your startup to investors? Here are a few things NOT to do.
Having delivered hundreds of pitches myself (and bombed a few), as well as coaching dozens of entrepreneurs on how to pitch, I’ve definitely seen some doozy pitches.
I sometimes wish I’d had a video camera with me to create a funny compilation of all the bloopers—something I might have shared with entrepreneurs on how not to deliver a great investor pitch.
I like to say that success is a terrible teacher. I’m not saying you’re going to get it right every time, but what’s important is to learn from those mistakes and adjust your pitch the next time you deliver it, based on what you’ve learned.
Bombing the Pitch
I have a vivid memory of bombing a pitch that I was delivering to a group of angel investors in Seattle. My flight was delayed by an hour, so I showed up with only five minutes to spare before being invited into the conference room to deliver my pitch.
Because I was late, I wasn’t able to check that my slides would be presented in the format I had hoped—and sure enough, the fonts looked wonky and the slide formatting resulted in text running off some of the pages. I was embarrassed and it shook me off of my game while I delivered my pitch.
This is where I could have taken a lesson from Gillette’s “Never let them see you sweat” ad campaign from the 80s. I could tell I was sweating and nervous, which took my focus away from the content.
This was also probably only the fifth pitch I had ever delivered—so another lesson is to make sure you’ve delivered your pitch so many times that you don’t need your slides to deliver the content confidently. If I had been better prepared, the wonky slides would not have made a difference.
Practice Makes Perfect
One of my mottos in life is “practice makes perfect”—and this holds true for crafting your pitch to make it perfect.
I always say, think of delivering your pitch as if you’re about to go up on stage and deliver an acting performance to an audience of theatregoers. This approach shifts your perspective from delivering a business pitch to delivering a performance that holds the audience’s attention and is hopefully worthy of a standing ovation.
You also would never get up on stage to deliver a theatrical performance without first studying your character, memorizing your script, and doing breathing and confidence-building exercises. You should approach your investor pitch with the same vigor and intention.
Sometimes, it’s best to learn how to do something by learning about how not to do it first! That’s why this post is about how to bomb your investor pitch.
If you’re more interested in crafting a great pitch, you can read more about that on Bplans.
5 Sure-fire Ways to Bomb Your Pitch to Investors
1. Don’t have respect for the investors’ time
It’s important to know your pitch inside and out and have multiple versions of the pitch: 30 seconds, one, three, five, and 10 minute rehearsed versions. This doesn’t mean you deliver the pitch as if you’re reading from a piece of paper, but practice the content and deliver it like a pro—just like an actor would. However, be ready to be interrupted and know how to get your pitch back on track.
I’ve seen pitches that made me cringe, where the CEO delivering the pitch is so wrapped up in his or herself that they get halfway through their presentation and they have run out of time. A total disaster! This communicates to investors that you don’t care about their time, you’re not prepared, you won’t be easy to work with if they decided to fund you, and that you have a huge ego.
2. Present a “hockey-stick” financial growth model without sharing your numbers behind your numbers (a.k.a. your financial assumptions)
If I had a nickel for every pitch I saw where the financial projections grow in the shape of a hockey stick, I could have funded my last startup!
Investors care more about how you’re going to a.) get to revenue, b.) scale it over the first year, and 3.) retain those customers.
Forget the five year financial projections. It’s old school and no one believes them anyway. What investors care about more than your “hockey-stick” growth are the numbers behind your numbers, or your financial assumptions (i.e. how many customers you’ll acquire and when, how many you’ll retain in year one, how many will churn out (leave you), the average revenue each customer will spend, etc.).
3. Offend your investors by over using acronyms and technical terms
This is another one where I wish I would have recorded pitches and scanned the audience of investors to show their faces and body language as the CEO delivering the pitch starts schpealing out things like, “our IP is strong because we’re ISO complaint and we’ve cornered the ABC market by using the XYZ technical blah blah blah.” Snore!
Now—all of this is important, so I’m not saying don’t share this exciting piece of information, but deliver it in such a way that doesn’t cause your investors’ eyes to glaze over and start scanning through their Facebook newsfeed.
Don’t assume your audience knows your business or your market like you do. If they did, they’d probably be starting the business. Unless you’re delivering your pitch to a highly technical group of investors who have deep industry knowledge and experience in your space, keep it simple. Sell them on the market pain you’re solving, not your acronym soup.
One investor told me that if his 80 year old grandmother couldn’t understand it in less than two minutes, he’s not interested. You may think you’re impressing them by speaking geek, but you’re more than likely turning them off to your deal.
4. Make shit up!
This is when you start sharing stuff about your market potential without having first done some deep due diligence on your market opportunity.
You might think, duh—I’d never do this, but you’d be surprised how many entrepreneurs do just that. I don’t believe they are doing it to pull the wool over the investors’ eyes, but new entrepreneurs are often so excited about their product or service that they assume all of their assumptions must be true without first fact-checking those assumptions.
The best practice here is to pretend you’re an investor and have your business partner pitch to you
The best practice here is to pretend you’re an investor and have your business partner pitch to you. If you don’t have a business partner, deliver your pitch to a mentor or advisor and ask them to be brutally honest.
Now, pretend that “investor” is interested in your deal. Begin breaking down each component of your pitch by asking things like: “How do you know this to be true?” “What is the source of this data?” “Are your competitors already seeing this type of behavior from the market?”
This due diligence process will make you more prepared, because interested investors will want to begin the due diligence process with you, and you don’t ever want to appear like you haven’t done your homework.
5. Tell them you haven’t spoken with any customers yet because your product is still in development
One major mistake a lot of first-time entrepreneurs make is following the philosophy of “if I build it, they will come.” After you determine who you think your market is or will be, start reaching out and listening to them. Most people like to talk about themselves and share what they’d like to see done better, faster, or cheaper.
Seek out your potential customers and ask them about the pains they have related to the product or service you’re building. I can guarantee their feedback will shape how you build your product or service.
Include your learnings in your investor pitch. They like to see the market research you’ve done. Wherever possible, include testimonies from real customers. No one sells your product better than happy customers.
Best of luck with your pitch.
By Caroline Cummings
Caroline is a two-time technology entrepreneur. She’s co-founded and held the CEO position for two internet companies, OsoEco (social bookmarking/shopping site) and RealLead (mobile marketing for the real estate industry). She’s raised close to $1M in investment capital and has coached several other startups on their investor pitches. RealLead was recently acquired by IDX, Inc, and Caroline joined Palo Alto Software to lead their marketing and business development for the cloud-based business planning and management tool LivePlan. http://articles.bplans.com/author/caroline/