You may think that brilliant ideas are what what get investors to say "yes," but that isn't the case. I've raised millions for my startup. I've also listened to pitches as an investor. Having been on both sides, I've noticed definitive ways that you, as a founder, can separate yourself from the pack.
The most important thing to an investor is having a sense of confidence in you as a founder and CEO. Here are five ways to instill that confidence and avoid mistakes that raise red flags with investors.
Investors see dozens of pitches every month and are incredibly gifted at detecting lies and exaggerations. They will know if you try to oversell yourself or the opportunity.
"When a founder isn't transparent about their challenges, it's often a red flag," says Christine Tsai, founding partner at 500 Startups. "Most founders put on the facade that everything is going swimmingly, especially when pitching investors. We know the reality--running a company is incredibly messy and stressful."
Her advice: "Be honest about your challenges and share not only what your plan is to address them, but also how you'd want investors to help."
Lead with your mission
Founders often believe that investors are looking for numbers and specs. As a result, they bypass talking about their mission and go straight to their product.
Don't start with "what," but "why." Articulate the problem you're solving and who you're serving. Then transition into how your product achieves your mission. Need help? Watch Simon Sinek's TED Talk.
I once heard a founder claim that his company was a risk-free investment. He promised all would go as planned and that the company would sell for $1 billion within two years.
Michael Yang, Managing Director of Comcast Ventures and one of the top investors in VR/AR, highlights the importance of being realistic: "Exceptional entrepreneurs dream big, but they also stay realistic. We look for founders who truly understand their product's market adoption timelines, recognize that hiring the right people is a practice in both patience and pacing and that early adopter feedback doesn't necessarily provide conclusions for the mass market."
Be the real you
Investors have great intuition. They can tell when something isn't right and won't trust someone who is putting on airs. Whether you're animated and expressive or quiet and calm, don't try to be someone you're not during a pitch. Avoid leaning on industry jargon or using too many acronyms. Be the genuine you. Investors will notice and appreciate your authenticity.
Know your stuff inside and out
An investor once asked my co-founder and me how long the funds we were requesting would last if we didn't get a deal that was set to close. At the time, our model had only accounted for the deal closing, so we didn't have an answer ready to go. Rest assured, we were better prepared next time to answer every question an investor could ask. You really have to know every part of your business, especially any key metric.
Putting it all together
At the end of the day, what an investor is really investing in is you. By following these suggestions, you will earn investors' trust and help them see why you're worth their venture. Step forward with confidence and be your true self. Be the kind of person who stands out for the better.