When
it comes to securing investment, the overwhelming challenge for most
entrepreneurs comes from trying to determine how to make a convincing pitch.
Fortunately, it does not have to be that difficult.
As
an entrepreneur and MBA who was
schooled in traditional investment raising, I have always been told that to
find investment capital for your business, you needed a comprehensive business
plan, detailing (among other things) S.W.O.T. (strengths, weaknesses,
opportunities and threats), operations and marketing plans, and financial
models showing projections, cash flow, return on investment, risk analysis,
etc.
These
days, I am working on a new startup idea with Startup.SC, a South Carolina
startup business incubator that focuses on scalable technology companies. What
I have learned over the past few weeks is that although there is no exact
formula for successfully developing a pitch, start by asking yourself this
simple question:
If
you were an investor, what would you want to see in a pitch?
Quite
simply, put yourself in the shoes of the investors you are pitching and focus
on these things:
1.
Customer acquisition, not revenue.
More
than revenue projections, investors want to know how you are going to capture
and retain customers. In a roundabout way, it is essentially the same thing
(both deal with revenue), but while revenue projections can be formulaic and
are for the most part completely pulled from the air, what speaks to investors
is a clear, effective and executable plan for capturing customers and keeping
them.
2.
The jockey, not the horse.
Investors
bet on jockeys, not horses. What investors want to see is that you are committed
and able to fulfill the task of implementing your plan through challenges as well as successes, and that you
are the type of person who is going to see it through to the end. Ultimately, a
great idea is worthless without great execution. Prove that you are the person
to carry out the vision.
3.
Flexibility, not recipes.
You
may have an idea of how you want to structure your company and your
investments, but understand that every investor has different expectations, as
do their partners and stakeholders.
4.
Remember: Nobody wants to see you fail.
When
negotiating with investors, entrepreneurs often get stuck in the wicked mind
game of trying to determine who is making out the best. In reality, success
depends mutually on two things: your passion and capabilities and your
investors' money.
In
the end, everyone loses if you fail, so it is in nobody’s best interest to
create a situation that erodes any chance of success.
