5 Mistakes to Avoid When Pitching Investors
The most crucial thing in raising funding for your startup is the investment pitch. This is the only chance where you can explain in detail about your business idea to the investors and convenience them to invest in your startup.
It is like a make or break moment so you can not afford to make a mistake. Entrepreneurs new to the startup world don’t know what to take care of when pitching investors and end-up making some common mistakes. These mistakes can be avoided.
In this article, I will tell you about what are the common mistakes, their impact, and how to avoid them.
Here are 5 Mistakes to avoid when pitching Investors for funding
Going in unprepared shows your lack of seriousness towards your startup. If investors sense your unpreparedness they predict your traits as well. They don’t want to invest in a startup having business people lacking seriousness.
The minimum preparation you must do before pitching investors is to prepare a pitch deck, know your potential investors, have a plan and vision. Going in prepared will doubtlessly take care of when you begin conversing with investors.
Having a pitch deck will help you to channelize your presentation. It will hold potential investors’ attention long enough to explain what your product does and why it’s a good investment.
Be flexible with the pitch deck it needs to be updated and improved from time to time. This is a very minute thing but often entrepreneurs neglect it.
To improve your pitch deck you can refer to the pitch decks that are available online. An alternative for this is- you can review others’ pitch decks, ask your investor friends to help you prepare one, or learn from failed startups what they did wrong.
Align your presentation according to your potential investors this will show how important this deal is for you. Knowing your potential investors will ease your work to achieve it.
Also, doing research on investors gives the impression that you genuinely want to collaborate with them and will go to great lengths to make it happen.
Having a vision is a must. It tells about what are your business goals and how the money invested in your startup will help you to achieve those goals. Having a plan to achieve goals will outstand you.
A well-planned business comprises having ground-level research and a path to follow. Use a business model canvas in case you don’t know what components to include in ground-level research. It has the components that are needed to make a structured business plan.
Don’t sound too desperate when pitching investors. Investors like to contribute and be associated with winning business ideas. Some entrepreneurs over behave in order to show their seriousness about the deal.
This is something you should consciously take care of as many investors find it unattractive. The other traits that can make you sound edgy are- only thinking about money, asking to sign an NDA, being too pushy.
What is wrong in only thinking about money, at last, you are seeking funding for your startup, ain’t you? Here is the catch- Investors are looking for an overall package to invest in.
Along with a potential business idea, they want viable people who can execute it and bring results to the table. In short, you have to sell yourself with your business plan. As investors and founders relationships go beyond ROI. It is important you focus on it and don’t think only about money.
A pitch deck is meant to be shared around the investors’ group. So, if you ask investors to sign non-disclosure agreements (NDA) then it will be a barrier in your way to connect with new investors.
And these new investors maybe your potential investors. Also, most investors have a policy to not sign NDA. On the off chance that you have something profoundly confidential, don’t share it.
The motivation behind a pitch deck is to develop interest between an investor and a startup—not to give a profound jump, which would typically occur during the diligence process. Add copyright notice in the pitch deck for your lawful protection.
Pushing your business idea or product extensively causes most investors to cut-off you immediately. Investors listen to your pitch because they must have found something in you and your startup. Be confident and make the fullest of the chance you get. Don’t ruin it by being pushy and desperate.
Exaggerated and unrealistic talk
To sound attractive entrepreneurs use buzzy words and claim unrealistic things. Many investors are in a game for a long time and they can easily understand if you overhype something.
The use of buzzy words will not necessarily articulate your business idea well. Be simple and most important, stick to the point.
Whenever mentioning any figures be factual and don’t make promises that you can’t live up to. If you fail to give what you promised then investors will lose faith in you.
Rember, stating figures doesn’t mean you have to present your startup’s financial spreadsheet. Investors want to see your startup’s scalability and how it will survive in changing conditions.
Know your business worth. Don’t project high business value; it gives the impression that you lack business acumen.
Tip: Avoid using acronyms and jargon in your pitch. Every investor is not well versed in your niche industry. Thus, they will lose their attention if you use acronyms and jargon in your pitch.
Not emphasizing key features
Feature(s) is like a treasure of your startup. It can be anything- a team’s experience, intellectual property, or anything less that makes you distinct from your competitors. Entrepreneurs neglect the importance of highlighting these key features and reduce their chances of getting funding.
Most investors believe a vital team is an important feature for the growth of a startup, especially at its early stage that incorporates a serial entrepreneur.
You have to specifically mention – what are their skill sets, what drives them, what is their experience, what temperament they have to grow the business.
Investors anticipate answers to such questions. Demonstrated the entirety of this, along with an energy to genuinely accomplish goals.
Intellectual property can act as a key to progress for many startups. I have seen this happen many times, mostly valid in the cases of early-stage startups.
Emphasize on intellectual property (patents, copyrights, patents pending, trade secrets, domain names, trademarks) your startup has and what measures you are taking to protect it.
Long Presentation and overlooking feedbacks
Try not to burn through your time making a long presentation or pitch deck. Most bustling investors don’t have the time to tune in to a protracted presentation.
An excess of data can bargain quality, so it is smarter to cut superfluous parts. A decent pitch ought to be short, fresh, and effective. A maximum of 20 minutes is enough time to articulate well.
You can prepare the presentation with a couple of slides that contain your business thought, the product outline, your marketing system, monetary projections, and how you will solve clients’ issues. You have to highlight how you will make an incentive for your business.
Many entrepreneurs overlook the feedback given by investors. One of the most underestimated advantages of engaging with investors is the feedback the individual gives the entrepreneurs.
Nonetheless, not many entrepreneurs take feedback in a valuable manner and follow up on it. Try not to go into a gathering with an investor trusting that you would settle the negotiation.
Go into one considering it a chance to have somebody to critique your business idea. It isn’t remarkable for entrepreneurs to be caught unaware of the inadequacies in their business model.
Feedbacks you get from investors frequently puts a focus on these issues you may have overlooked. Moreover, a ton of investors would view you well in the event that you take the feedback, join it into, and amend your idea. They are likely to reconnect with you when you do this.
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