Seeking money for a startup from friends, family, angel investors, venture capitalists or lenders is an exercise fraught with pitfalls. Many first-time entrepreneurs approach it with great optimism and belief in their business idea, only to fall flat on their face.
Reasons vary, but often it’s just that the entrepreneur hasn’t taken the time to study up on how to approach investors, including what to do and what not to do. The Young Entrepreneurs Council – an invitation-only group of young entrepreneurs – recently asked some of its most successful members to name the dumbest mistake they could think of that entrepreneurs should avoid when pitching investors.
Here’s our take on the top mistakes they came up with:
• Making it all about the money. “When pitching an investor, you’re not just pitching your great idea. A relationship with an investor goes beyond the ROI, and it’s important to focus on selling yourself as well as your business plan,” says Raul Pla, founder and CEO of SimpleWifi.
• Being unprepared. This is an unforgivable sin. The entrepreneur, of all people, must have the details completely buttoned down. “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,” says Jason Evanish, co-Founder of Greenhorn Connect. You must show you can lead a business.
• Promising too much. “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 immediately,” says Jordan Guernsey, CEO of Molding Box.
• Rushing the pitch. “As nervous as you might be, try to calm down and speak from the heart,” says Logan Lenz, founder of Endagon. “Speaking more slowly not only allows listeners to register what you’re saying, it also makes you sound more confident and knowledgeable.”
• Making all projections and no plans: “Don’t put a hockey-stick graph in the middle of the presentation and expect everyone in the room to swoon,” warns Brent Beshore, CEO of Adventur.es. “Projections are guesses that rarely come true. What’s more impressive is your plan to get there.” •
Daniel Kehrer can be reached at editor@bizbest.com
