fail_12 ways to blow your investor pitch

8/14/2019 FAIL_12 Ways to Blow Your Investor Pitch

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The K-Mart Template Business Plan

Over 500,000 business plans float around the internet attached (by a fishing line and a bobber usually)to a hopeful entrepreneur dreaming that some day their 53 page (single-spaced) doc will bedownloaded by a wealthy investor who will find their idea so damn compelling that theyll call franticallyasking for the ABA routing number so they can wire you a suitcase full of cash immediately.

Well, if your first move is a long winded template style business plan you purchased from the digitalequivalent of K-mart, chances are youre fishing with the Rocket Fishing Rod. We hate to play dreamcrusher, but you arent on a TV commercial, and these ponds arent stocked with starving fish.

#1
https://www.spindirect.com/product_order.php?productid=16618&s=rfrgen2&sessid=108318b1e2beae454cbeb1107555ebcehttps://www.spindirect.com/product_order.php?productid=16618&s=rfrgen2&sessid=108318b1e2beae454cbeb1107555ebce


4/27

Sexy Materials Get Noticed

One thing that book publishers know is that in order to convert a browser into a customer, you must firstcapture their attention at the shelf. Dont fall into the trap of thinking that just because your business hassound financials and a good product that investors will plow through a long boring document anduncover the genius inside.

An investors belief in your ability and your concepts strength starts with the very first time they lay eyeson your business materials. Seriously, how is one to believe that your business will inspire consumers ifyour materials look like like they were pulled together on a Commodore 64?

#1


5/27

Talking Up Your Awesome New Product

One surefire way to lose your audience is to jump right into talking about your amazing product. Yep,without the proper context your long winded rant about the crucial need for a rapid charge system for a14.4 volt lithium ion battery is going to fall on deaf ears.

Chances are the person you are speed pitching isnt the target consumer. Think it through, if most

investors arent currently feeling the exact itch your product scratches, you need a different approach.

#2


6/27

Talk About Solving a Real Problem

Instead of talking about your solution, start by explaining the consumers needs. While its essential thatyou bring the investor to a point where they understand your product, understanding the buyersneedsis more important. Try telling a story about a real person who needs your solution. Take the audience toa place where they can see the world through that persons eyes. Help them feel that customers pain.

Talk up the need for big holes first and then everyone will want to hear all about your six-ton super drill.

#2
http://www.youtube.com/watch?v=8UQ-5QP9pkshttp://www.youtube.com/watch?v=8UQ-5QP9pks


7/27

Showing Off A Feature Bloated Demo

Okay adrenaline junkies, here is your big chance to see if you can get lucky with a live demo. Chancesare if youve made it this far, youre excited, so geeked up that youll probably veer off down a path thatnobody else wants to go where youll leave the listener confused and dizzy..

We call this the tilt-a- whirl demo a dizzying array of irrelevant features and functions. Dont worry,

everything that plugs in will usually crash anyway, so be sure to have an audible up your sleeve.

#3
http://www.youtube.com/watch?v=vzFUcDKC64Ehttp://www.youtube.com/watch?v=vzFUcDKC64Ehttp://www.youtube.com/watch?v=vzFUcDKC64E


8/27

Weave a Memorable Story Into The Demo

While your product demo is important, how you get the audience to that point is often the truedifference-maker. So itsup to you to take investors on a journey into the life of your consumer andexplain how exactly they would use your solution. Help us feel their pain.

Let us experience their joy when you save the day and chop the big bad wolf in half with an axe. Anddont get distracted by all the pretty things to talk about (or look at) along the way, just get to the payoffin a clear and concise manner.

#3


9/27

Touting Top-Down Market Data

Search is a multi-billion dollar market, so you conservatively project to capture a measly .001% of thesearch market and make tens of millions per year? Sounds pretty reasonableif there is a multi -billiondollar market then there has to be some room for a niche player to squeeze out a little of market share,right? Wrong.

Make sure your assumptions arent wildly off base either, or youll be hard -pressed to last long enough in

a pitch to actually get the opportunity to defend them.

#4


10/27

Build a Bottoms-Up Business Model

When you talk about the size of the market, and how you plan to capture market share, start at theground floor with your team and work your way up. How many consumers need what you have rightnow? Are within range for your team to contact and have the budget to buy? Assuming you canconvince a percentage of those truly addressable consumers to pull out their wallets, what kind ofgrowth can you realistically project? Tie it back to your sales teams individual contributions if possible.

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11/27

Your Business Has Users, But No Revenue

No margin? Well make it up in volume! Who could ever make that mistake again? Admittedly thereare still a number of ventures that dont have a real revenue model, but are media darlings. Dont befooled, the media also loves a good train wreck.

Are you able to demonstrate that there is a thirsty crowd willing to pay for what you are offering? Yep,

we said pay. Or are you living a K-Fed fantasy?

#5
http://www.msnbc.msn.com/id/15516597/http://www.msnbc.msn.com/id/15516597/http://www.msnbc.msn.com/id/15516597/http://www.msnbc.msn.com/id/15516597/


12/27

Show a Clear Economic Model

Okay, this is important. If it takes a complex chart and excel to explain how you make money, youvemissed the mark. We love to see a simple unit economic model for each stage of the business. Oh,dont be afraid to show year to year percent changes in costs, revenues, and profit (loss) so we can geta handle on how you see things changing over time. Are your prices realistic, or based on a hunch?

Bonus points if your data is based on actual sales

#5


13/27

You Disappear In a Sea of Sameness

But my idea is groundbreaking. You should think this way, its your baby. Your belief in your concept is

what gets you out of bed in the morning. Unfortunately, the odds are that somebody is already workingon something similar to you. And guess what, that competition probably has a nice head start.

Psst, you can develop the best, most innovative product or service, but if nobody knows about it nor isinspired to give it a try, then youre just swimming around aimlessly in crowded waters.

Bottom line: if your brand isnt differentiating and motivating, its game over.

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There Can Only Be OneIf youre going to inspire consumers to buy your product, you have to nail your customer -facing brand.

Is it compelling? Does it stand out? Does it resonate with your desirable target? Be able to confidentlydescribe how you can connect with your consumer because your understanding of their emotional andrational needs is unmatched. No one said pimpin was easy. Its a competitive game. So step yours upand show investors that you know how to bring your brand to life in a relevant and inspiring way.

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15/27

We Have No Serious Competitors

Our offering is so revolutionary, that there is no real competition. Really? Okay, if you solve a seriousproblem, then you have competition.

If you dont solve a serious problem, then consumer inertia (an object at rest tends to stay at rest) isgoing to be a formidable foe. While you should have a solid plan to out maneuver your competitors, toassume you have none is flat out foolish. Thats when someone will emerge from the shadows to showyou how the game is really played.

#7
http://www.vgchartz.com/http://www.vgchartz.com/


16/27

Out Think & Out Execute The Competition

The game plan that you lay out should inform investors that you not only understand your strengths, butyou can see your opponents weaknesses and have some ideas how to exploit them.

From understanding the needs of the consumer you should be able to work backwards and positionyour business to dominate the competition. In a competitive arena, devising a clever strategy is only onehalf of the equation. Successful start ups out execute others by accomplishing more with less.

#7


17/27

A Really Uninviting Marketing Plan

Ourproduct is so good that consumers will find us. Theyll be searching the internet day and night forus. All we really have to do is hang up a sign and theyll come running. Seriously?

Chances are consumers have no idea what you offer, and their first reaction will likely be suspicion,doubt, and fear. Before you can motivate someone to buy, its critical you take the proper steps toexcite and educate your target consumer on the front end.

#8


18/27

Grow Your Brand With The Right Fertilizer

If there are consumers that need what youve got, then you should be able to get some early adoptersto jump on board and champion your cause. Even a small group of early adopters can go a long, longway towards building out an army of virtual sales reps who leverage their independent voice andsupreme credibility to champion your solution to the masses.

First rule of marketing Fight Club? Recognize that your consumer is in charge. Authentic brands earn

respect, they dont purchase it.

#8


19/27

Youre Going Into Battle All Alone

Whenyou look in the mirror you see a one man army ready to take on the entire universe. But theresone small problem. You work alone and your team consists of nothing more than your hosting providerand your cat named Boba Fett. Investors look for businesses with strong leaders. If youre really aleader and nobodys behind you, than maybe youre just out for a walk (in the wrong direction).

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20/27

Give Your Dream Team Some Exposure

Ordinarily name-dropping is seen as trying too hard. However, if you have some impressive individualson your roster, dont be afraid to show them off to investors. While conversations about capital are bestkept in a small circle, meeting the dream team is a great way to showcase your company.

If you dont have all the roster spots filled, you should do some homework and line up a few more allstars to come on board as the company scales up. Go out and secure the best of the best at every

position on the team. This includes key customers, strategic partners, and expert advisors.

#9


21/27

Needing Cash Yesterday (do you validate parking?)

Dont assume that raising capital is like a pit stop where you can re -fuel your balance sheet in less thanthree seconds. Investors never like to be rushed, and telling them that youre in a position where youcant make payroll on the first date isnt usually a confidence builder.

Try to balance off your desire to get back in the race with the cautious nature of the person being askedto pay for the race car. They have a right to make sure you know what you are doing, and that the raceis one worth entering.

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Reasonable Timelines For Moving Forward

Want to build momentum? Surface a timeline that shows youve been progressing and hitting a seriesof milestones that have created exponential growth in the value of your business. Then propose thetimeline that your financing would like to move along and see if that might fit within the timeframe forthe investors.

Enthusiasm is great. Hastiness is not. Take a breath and make sure youre building out a high levelroadmap to explain not only each phase and milestone, but also the timeline and budget requirements.

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23/27

Stretching The Truth (and then some)

Theres nothing more of a turn off to investors than entrepreneurs who spin and spin until theyvecreated their own web of untruths and inconsistencies. Being pitched over and over has its advantages.It gives investors an extremely high bullshit radar.

Listen up, the fundraising process is built on trust. So its probably not wise to begin the courting processby throwing out wild over-exaggerations and clearly inaccurate data.

#11
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/07/MNIK147QU3.DTLhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/07/MNIK147QU3.DTL


24/27

Honesty Isnt The Best Policy Its The Only

We know, it seems like the most master of the obvious part of the pitch. But if thats the case, why doso many entrepreneurs fail this part of the exam? Investors see and hear success-oriented pitches andfinancial models all day long. Make sure you stand out in a good way.

Trust is earned by being open and honest, not by tossing out delirious valuations. Its understandable tohave passion and enthusiasm for your concept. But when selling your vision, keep your hype under

control. If you are asked a question that you dont know the answer to, its okay to say, I dont know.

#11


25/27

Not Being Prepared = Prepared To Fail

We havent really been thinking about outside investors just yet, so Im going to need some time to pull

a few documents together. (insert three weeks here). You absolutely never know when or where theright strategic partner or capital investor may cross your path.

You need to be ready for anything. Who knowsmaybe a little dribbler down the baseline could makeor break your entire career, and cost your team a World Series title. (Sorry Red Sox fans)

#12
http://www.metacafe.com/watch/2910082/bill_buckner_play_1986_world_series/http://www.metacafe.com/watch/2910082/bill_buckner_play_1986_world_series/


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Make The Most Of Your Opportunity

Youve worked too hard on your concept to just watch it slowly flame out. Get your materials into a fullyfunctional state right away, so youre truly investor ready. Youll want to make sure to leave thestructure open and flexible as your documents are likely going to change time and time again.

Execute the brilliant basics first; a good overview presentation (30 min), a basic demo (live or video), andvery basic financial model. A strong pitch is your best move at accelerating investor confidence. If youre

fortunate to get this far, failure is not an option (dont be pitchy, dawg). Time to step up to the mic .

#12
http://www.youtube.com/watch?v=9lp0IWv8QZYhttp://www.youtube.com/watch?v=9lp0IWv8QZY


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Additional Resources & Inspiring Links

Breaking Through the Broken (A North Whitepaper)

Other goodies:Failblog.org(funny stuff)Customer Development (Eric Ries/Steve Blank)Seths blog (Seth Godin Blog)Futuristic Play (Andrew Chen Blog)

North Venture Partnersdontgosouth.com

[email protected]

1729 Telegraph Ave.Oakland, CA 94612(510) 465-0800
http://www.slideshare.net/NorthVenturePartners/breaking-through-the-broken-the-transparent-guide-to-overcoming-the-inefficiencies-in-early-stage-venture-capital-presentationhttp://www.failblog.org/http://www.slideshare.net/sblank/customer-development-at-startup2startuphttp://sethgodin.typepad.com/http://www.andrewchenblog.com/http://www.dontgosouth.com/mailto:[email protected]?subject=I%27d%20like%20to%20learn%20more%20about%20how%20North%20works%20with%20early%20stage%20ventures.http://www.slideshare.net/NorthVenturePartners/breaking-through-the-broken-the-transparent-guide-to-overcoming-the-inefficiencies-in-early-stage-venture-capital-presentationmailto:[email protected]?subject=I%27d%20like%20to%20learn%20more%20about%20how%20North%20works%20with%20early%20stage%20ventures.http://www.dontgosouth.com/http://www.andrewchenblog.com/http://sethgodin.typepad.com/http://www.slideshare.net/sblank/customer-development-at-startup2startuphttp://www.failblog.org/http://www.slideshare.net/NorthVenturePartners/breaking-through-the-broken-the-transparent-guide-to-overcoming-the-inefficiencies-in-early-stage-venture-capital-presentation

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