10 Mistakes A Startup Founder Shouldn’t Make When Pitching to Investors
Getting an investor is one of the most important and difficult steps required for a startup. If you are planning to start your own business, you must have someone to finance it.
Remember, an investor is no one from your team. He is someone whom you need to impress with your ideas and convince him/her to help raising funds for your business. One wrong attempt and you can lose your would-be financier.
Here is a list of mistakes that a startup must not commit while approaching investors.
1. Avoid sending unsolicited business plans
Investors do not entertain unsolicited emails containing business plans/ideas. They prefer going through the business proposals that come from their known references, such as, an entrepreneur from their related organisations, a lawyer or peers.
2. Don’t send investors a lengthy business plan to review
Inexperienced entrepreneurs make a very common mistake of giving investors lengthy business proposals to go through for review. Be careful with this, as your financier has no time to review a 50 or 60-page business plan. Try to keep your proposal short and concise. A 2–3 page summary covering all aspects in brief will do.
3. Let everyone in your team speak
Normally, when a startup team visits an investor, the head or the CEO is the one speaks about the company, its agenda and its goal. Investors will always take interest in knowing the capability of team members. So not only the CEO should speak, but other team members should participate in the discussion equally.
4. Don’t avoid discussing market competition with investors
Most of the entrepreneurs/startups think it is easier to convince an investor to spend in their business by showing them there’s no competition for them in the market. But remember, your financier knows that there is always a competition in business. Don’t show you are incompetent by running away from the reality of facing market competition.
5. Make your approach unconditional
The startups are found asking investors to sign a non-disclosure agreement (NDA) to ensure their ideas are kept confidential. You must not ever do so. You must trust the one you are approaching to get your business financed. It might hurt the cognitive sentiments of the financier.
6. Give proper answers to questions asked
Make sure you keep your answers to-the-point when an investor starts asking questions regarding your business. Keep in mind an investor questions an entrepreneur or startup only when he seeks interest in his business plan. So don’t be confused while answering his queries. You know your business well and you can explain it better than anyone else.
7. Don’t assume what your business might achieve
Avoid giving assumptions while discussing your plan with the investor. Be practical in your approach. Don’t say your product or service does not need to be marketed. It can market itself. Don’t imagine things. No product and service can market itself. Your financier knows the reality.
8. Keep your Powerpoint presentation short
Avoid overloading your presentation with too many slides. Keep the business presentation short. If your investor likes it, he will ask for details to be presented on the next appointment.
9. Introduce your team and members’ abilities
Introduce your team to the investor. Most of the investors are interested to know the background of the team members who have founded the startup. Tell him/her who are the founders, who are the members of the startups and what are their educational and professional qualifications. You can also focus on their professional experiences.
10. Research on your investor’s portfolio
One of the minutest things is to make sure you do a proper research on the investor and his/her background before approaching him/her. This will help you know whether you will be asking him/her to finance in a business he/she seeks interest in.
The above-mentioned points seem simple, but these are the most important and crucial points to be taken care of. Keeping in mind these points will surely be helpful for you to convince investors and get your business financed. Remember that you can’t afford losing an investor at any cost.
Susmita Pathak Mishra
Susmita works as on Online News Reporter besides being a mother of two. She has acquired a Masters degree in Journalism & Mass Communication. Writing is her hobby and she loves to listen to soft music.
Please follow and like us:
Originally published at startupsimba.com on May 18, 2017.
For more information visit: http://www.startupsimba.com/
Want to submit your startup story or guest post/blog, write to: email@example.com.
You can also follow us on: