8 Things to Know When Pitching to Investors
Pitching your company to a potential investor can be daunting and many entrepreneurs are not as prepared as they should be, hoping for the best, which rarely happens. Pitching is a skill and knowing how to motivate an investor is just as crucial as your business model. Jumpstart talks to Desmond Marshall, organizer and investor for Hong Kong's first funding, investor-motivation, and mentorship event - "Pitch Perfect", where he funds entrepreneurs locally or overseas, and also mentors potentially viable ones to improve their business model and investor motivational skills. "If you are asking people for money, you will need to know how to ask them, especially when the investor is considered your most important VIP customer" says Desmond.
Desmond shares his thoughts on pitching to investors.
1. Don't Lie Never lie about your business and it's results. There is no shame in small operations. Investors are your partners, and we spot lies and hesitations immediately. We don't work with someone we can't trust.
2. Research your investor When you go to a job interview, you research the company/your boss, to increase your chances. Do the same with your investor. It's more impressive when you speak along their lines of thought, and you will certainly get more attention.
3. Don't sugar-coat figures Many entrepreneurs like to use percentages to "sweeten" low actual figures, eg. 20% conversion rates, 50% responses, etc. Savvy investors can immediately spot such "beefed up" results, and will either think you're lying or you are using a small base denominator. Either way, this creates doubt and distrust. Use actual figures, tell investors your base is small, do not lie. Divert them to your other strengths of the operations instead.
4. Dress to impress You can dress like Steve Jobs once you're famous. We don't place much trust in someone who looks like a homeless person with our well-earned money. A well-fitted power suit and tie is not expensive. Exude success and you will pitch more confidently, impressing your investors.
5. Don't use family & friends as your benchmarks Your mother will love and support you in whatever ways she could. Using your family (or close friends) as successful case studies only shows you actually have no real customers. Investors need to see recurring revenue possibilities from larger customer groups, in order to justify investments.
6. Be prepared to answer "why we should lend you money" Investor funding is NOT charity. Its a form of leverage and there are terms attached to this form of financing. Strangers are lending you money for a reason. In that sense, you should think about what returns you could repay back to the investor, either monetary or something more intrinsic.
7. Don't focus on yourself; focus on the customer Every entrepreneur brags about his/her product/service. Investors constantly get earfuls of such "sales talk", and we are immune to them. Focus instead on helping people solve actual problems. Your product/service will fall into place and it will be more convincing to the ear.
8. Find a real mentor with business/investor skills to guide you An investor thinks in a very different way than a business person. With a startup business you need to find someone who understands this difference and strikes the right balance for your company.
For more information and registration on the next Pitch Perfect event in May 2015, please visit Pitchperfect
By Desmond Marshall, Chairman for Institute of China Customer Motivation and Rouge Ventures, and is the organizer for Pitch Perfect event.