Pitching venture capitalists or angel investors is nerve-racking. Young entrepreneurs explain trip-ups you should avoid at all costs.
The Young Entrepreneur Council asked 15 successful young entrepreneurs about the dumb mistakes entrepreneurs make when initially pitching to investors. Here are their best answers.
1. Smelling of Desperation
When you pitch to an investor, don't sound desperate. People like to invest and be connected to winning projects. If you come off as though this investment is the only way for your business to move forward, it seems needy and is unattractive to many investors, and can set you up to be taken advantage of. You'll end up giving away more equity then you should.
--Raoul Davis, Ascendant Strategy
2. Thinking Only About 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.
--Raul Pla, SimpleWifi and UseABoat
3. Going in Unprepared
Just because you have an idea and you think you need help does not mean you're ready to raise money. 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. The questions are core to justifying the investment.
--Jason Evanish, Greenhorn Connect
4. Introducing the NDA
Ideas are cheap. Chances are you'll be laughed out of the meeting if you ask investors to sign an NDA. More important, anyone willing to sign an NDA in a first meeting is probably not sophisticated or serious enough for you to be considering as an investor.
--Michael Tolkin, Merchant Exchange
5. What's a Negotiation?
It's rare that an investor will, straight out of the gate, give you everything you ever wanted. You need to know what you can do with different levels of investment, and have an idea of what situations are bad enough to walk away from the table. A pitch to an investor is the start of a negotiation, and you should treat it as such.
--Thursday Bram, Hyper Modern Consulting
6. Being Too Pushy
The investors are there to hear your pitch because they see something in you and your company. Those who push their product or idea too much cause most investors to immediately shut down. Be cool and confident, but not like a used-car salesman. You only have one chance to make a first impression, and don't blow it doing this simple thing.
--Ashley Bodi, Business Beware
7. Not Saving the Best for Last
Many entrepreneurs make the mistake of meeting with their best investor prospects first, yet their pitch only gets better with time. You will achieve your greatest odds by saving the best for last. Note reoccurring questions and concerns after each pitch, and revise your materials accordingly. Once you get to the big guys, you will be confident enough to close the deal.
--Christopher Kelly, Sentry Centers
8. Taking Criticism Personally
Most investors are direct and are going to ask you the tough questions. That's a good thing; it means they're thinking about your idea. Don't take feedback or tough questions personally or as personal attacks. Answer directly, and if you don't know, say so. Don't make something up.
--Nathan Lustig, Entrustet
9. Putting Down Your Passion
You need more than passion to convince investors. You need a well-thought-out business plan and a great product. Even with that, though, don't be afraid to let your passion show through. It'll carry you through the entrepreneurial journey, and investors know that, so don't try to be all business by hiding that enthusiasm. Display it. It's an advantage, not a weakness.
--Nick Friedman, College Hunks Hauling Junk
10. Leaving Without the Q&A
Allowing time for questions will naturally create the need to have a concise and focused presentation, while also allowing the investors to partially guide the pitch. No matter how organized a pitch is, it may fail to answer certain questions your audience has. Planning for Q&A time allows your pitch to be clear to someone unfamiliar with your line of work.
--John Harthorne, MassChallenge
11. Promising Too Much
12. Being Overdiligent About Disruption
Entrepreneurs often work on ideas in areas they're passionate about. Along with that can come a sense of religion about changing the way a certain industry works. An entrepreneur who cares more about disruption than building a sustainable business can often lose sight of the decisions that must be made.
--Derek Shanahan, Foodtree
13. Don't Make Projections, Make Plans
Don't put a freaking hockey-stick graph in the presentation and expect everyone in the room to ooh and ahh. Projections are guesses that rarely come true. What's more impressive is your plan to get there. Investors know that your strategy means a lot more than your pretty pictures.
--Brent Beshore, AdVentures
14. Rushing the Pitch
As nervous as you might be, try to calm down and speak from the heart. Memorization is often the biggest crutch during a presentation. Nerves get the best of us, and we try to rush through just to get it over with. Speaking more slowly not only allows the listeners to register what you're saying, but it also makes you sound more confident and knowledgeable.
--Logan Lenz, Endagon
15. Picking the Wrong Angle
Entrepreneurs often make the mistake of pitching an angle about their business that may be exciting to them but isn't necessarily what investors would like to hear. Investors want to learn more about very specific items that help them to formulate a judgment, such as how the business is going to make money and how the company will be scaled.
--Ben Rubenstein, Yodle
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