By Mike Sims
For most startups, finally getting in front of a potential investor is a dream come true. After bootstrapping for months or even years, they know that securing the right deal with the right partner can truly be life-changing. Unfortunately, very few startups leave their investor meeting with a deal, and the vast majority are never able to raise funding at all.
To put it in perspective, there are over 28 million businesses operating in the United States with 627,000 new businesses launching each year. According to the Angel Capital Association though, only around 300,000 people (angel investors) have made an investment in the last two years.
When it comes to pitching investors for funding, the odds are against you. Investors work hard for their money and they have the opportunity to invest in one of several million businesses. If you’re going to win them over, you’ll need to impress them in a way that most businesses cannot.
Even if you give the best pitch and do everything perfectly, things still may not work in your favor. Yet, many entrepreneurs do not deliver the best pitch. They often make huge mistakes during their presentation that guarantees that an investor will pass on the chance to invest in them.
In this article, we will examine three ways to blow an investor pitch, so you can avoid common mistakes and maximize your chances of striking a deal.
1. Information Overload
Unbeknownst to most new entrepreneurs, an investor pitch isn’t the right time to give a cover-to-cover biography that includes every detail of your business. When you’re in front of investors, your mission isn’t just to inform them on what your business is, it’s to persuade them to invest their capital.
Don’t bore your audience with a boatload of mindless details. Be clear about the story that you want to present to investors and provide the exact information that supports that story.
It may seem like a good idea to load your pitch up with as many facts as possible, but it isn’t. The more details that you provide, the fewer details that your audience will remember.
Examine your pitch deck and your script carefully. Are there details that could be removed without affecting the strength of the pitch? If so, remove them.
Before an investor decides to write you a check, they will do their due diligence. They will request documents, dig deeper into your data, and verify your information. Save the fine detail for this stage. During the pitch, focus on the story and build your plot around only the most important points.
2. Blind Pitching
Preparation is key to a successful pitch, and one of the most important elements of preparing for a pitch is knowing your audience. Pitching a panel of judges in a pitch competition is quite different than pitching a VC one-on-one in a conference room. When you know who your audience is, you can personalize your pitch to fit their needs.
If you are pitching an individual or a firm, learn as much about them as you can. Look for other companies that they have invested in and try to identify what made those companies special. Knowing what details your audience finds important allows you to deliver the specific information that will perk their interests.
Don’t stick to a single script. Every time you pitch to a new audience, adapt your pitch to fit the interests of that audience. Investors recognize when a pitch was built just for them, and the gesture shows them that you are willing to go above and beyond to reach your goal.
3. Terrible Pitch Deck
A pitch deck can be an amazingly effective tool if used in the right manner. When used incorrectly though, it can be a distraction and cause investors to overlook important details.
Your pitch deck shouldn’t be the main star of your pitch. Instead, a pitch deck should be used to support the presenter as they pitch an audience. Be selective with the words that you place in your deck. Too many words on a slide can cause investors to read intensely, instead of focusing their attention on the information that the presenter is delivering. Use bullet points to make it easy for the audience to follow along and avoid using small font sizes that are difficult to read quickly.
Graphics can greatly enhance a pitch deck, but overdoing it is a mistake. Use imagery to help the audience follow your story better, not simply just for the sake of great design. While the design of your pitch deck is important, it is less important than ensuring that it is easy to follow and that it perfectly supports the details of your pitch.
Delivering An Unforgettable Pitch
It’s not only what investors think about your business during your pitch that’s important, but also, what they think of your business after the pitch. Investors forget about most businesses within hours of being pitched. If you want to strike a deal, you need to make a memorable impression.
Here are three ways to make your pitch unforgettable:
- Answer Objections Before Asked: Investors will have questions about your pitch, and they will also have objections. Identify the flaws in your business early and address them in your pitch. Detail your plan to overcome these objections. This shows not only that you are able to think logically about your business, but also that you are a solution-oriented entrepreneur.
- Tell a Great Story: People forget details, they forget businesses, they forget people, and they forget ideas. However, stories stick around for generations. Instead of just delivering generic details of your business, use storytelling to drive your points. While the “redemption” story always strikes a chord, there are several different storyline models you can use to improve the effectiveness of your pitch.
- Showcase Progress: If there’s one thing that will impress investors, it’s traction. The more traction you’ve showcased with your idea, the greater the interest will be in your business – and the higher your startup valuation will be if you are able to strike a deal.
What Happens If You Blow It?
Luckily, blowing your investor pitch isn’t the end of the world and it shouldn’t make you give up with your fundraising efforts. In fact, for the startups that do land an investment deal, most of them don’t do it on the first try.
Always listen to your audience’s feedback about your pitch. Use their critiques to refine your presentation and implement their advice to improve your impact. Take every opportunity to practice your pitch on a new audience until you are comfortable delivering it in any situation.
If you fail, keep trying. If you keep failing, refine your pitch, and try again. You may lose the battle, but as long as you stay in the fight, you’ll eventually win the war!