One of the greatest stress situations generated any entrepreneur is to have to make a presentation to an investor … especially if it is the first time. Assail us nerves, uncertainty, and doubt thousands … how I should approach it. Above all …what should I avoid rookie mistakes if I want to convince you?
How you should prepare your presentation for investors (or pitch deck), the keys to making your meeting, the most important questions you are going to do, and even the most common when dealing with investors errors, yet we was talking about a key issue: what phrases, attitudes or actions you will automatically discard.
Still, before addressing the issue I would like to talk about the most important question to ask before we go talk to an investor. I need it why? I am willing to put someone on my company that pushes me to grow. You are my only option or I can choose others like bootstrapping?
In addition, you should ask yourself these questions not because investors are bad, far from it: not only are going to provide capital but contacts will help your company grow faster and better … etc. but maybe that is because you do not want, and prefer to go “to your fly.” Think about it.
The mistakes you should not make when talking to an investor
1. REQUESTING NDA BEFORE SPEAKING
If there is something you automatically discarded before an investor is that, you ask to sign a confidentiality agreement (NDA or Non-Disclosure Agreement) before showing your project… for several things. First, because it has an interest in investing in your company you, second because it shows a lack of tremendous confidence and thirdly because if accepted would eventually have 10,000 countersigns all signed NDAs … impossible to manage.
That does not mean that time and if it really shows interest in knowing more detail how to do things, is willing to sign it, it will. However, if all you need to copy your project is someone to listen to what the idea had a better look for another project because ideas per se are worthless.
2. Raise money without trying to pull
I will not argue that only invest in projects that have begun to “move” is the right strategy … but is most common in investors. As we stated above, investors do not invest in ideas but in projects … and these are realized not only to create the product but confront with the market … and get some validation, which is called traction (something or yes you should understand).
“As says Mark Raider, the sequence of success right is USERS -> Clients -> INVESTORS”
3. Say no competition
If there is, a phrase that gives an investor fear is this. If there is no competition, usually for several reasons: either there is no market, and, therefore, there is no competition… or you do not. It is very rare that you have discovered a new market, and even if it is still dangerous: open a new market is very risky, requiring many funds and above all, it takes a long time to do … because we have to “educate customers” (another banned phrase). So be careful!
4. Do not leave talk
If you have a meeting with the investor, you should book as little half the time available to answer your questions and discuss a possible deal. If you need an hour to explain your project, possibly better go back to your office and give it a spin … because you will not normally count only 30 min to perfectly explain (and 30 min for questions). If you spend all the time to explain your wonderful product that will change the world, it is quite likely doing not ever know anything about him.
5. Defend / Reviews to Justify
One aspect that causes a bad impression to anyone in general, and to a particular investor is not able to accept criticism or vision different from yours. Whether you agree with it or not, do not invest the limited time, you have to prove that you know more than he does and that your way is right. Remember that the investor, a person who sees tens or hundreds of projects a year and has a very broad view of the sector, when it gives you feedback makes you a gift … so be thankful and tell you to analyze what you discussed.
6. Lying or not recognize that do not know something
Investors will probably ask questions that you do not expect and can leave you out of the game … never, under any circumstances, you invent the answer and above all, do not lie. First, because starting a relationship that you will join for a long time with a lie is a bad idea … and then, because you will probably catch sooner or later, and that will drop you forever not only in the eyes of the investor but perhaps even to the rest.
You had better say it is something you do not know, but possibly, find the data soon … and when you have the answer you will get in touch (a perfect excuse to follow up). A case of this is to lie on such data as the figures traction, billing … etc., which is a very bad idea.
7. Not be able to explain what you do
If you are not able to explain exactly what you do to an investor shall never believe that you can sell it to a customer. So strive to define clearly and perfectly understandable your value proposition and above all, your business model (i.e. how you make money).
In addition, please, do not talk in technical. Although investors usually have a broad view of the field where they invest, they are rarely experts in everything, eliminates acronyms and other esoteric terms that not everyone understands.
8. Too inflate the value of your company
Today a startup will the next day to open the shutter worth 1,000,000 dollars. It is unclear why, but companies with little traction and a few customers feel confident in saying that its market value has 6 figures. However, if the investor asks you why you chose that assessment, are not able to explain convincingly, and reasoned way, you will look like a rookie.
In addition, you may not discuss the assessment, but not into your company. Because a high valuation requires that between the round, which the investor invests and the next round of investment a very significant increase in value in the company (which will increase the value of its shares), i.e. forces occur to assessing the next round are much higher (yet). Therefore, if you start with too high value what you are doing is greatly complicate the next round and get yourself sticks in the wheels. You either underestimate or put a sensible figure.
9. Trying to avoid at all costs the dilution
The shareholder structure of your company says a lot about you and your way of understanding the business. Entrepreneurs not under any circumstances release equity (capital) and who do not share even a small percentage founders or other key positions are not welcome. In addition, this applies to measures dilution and fights anti-equity crumbs.
Although of course it is important not to give away equity, your goal is not to get the biggest piece of the pie of your startup, but make the cake as large as possible … so spend less time talking about the dilution and more on how you will take your startup the next level
10. Order of funds to pay salaries / Shop furniture / Raise wages
You must keep in mind that when an investor puts his trust in you, it does to better your living or to become a boss who pays the wages … it does because you bet the future of your company, help to evolve and become what it aspires to be, to make the pie bigger.
That supposed to take and reflect the funds that an investor decides to invest in your startup will go to improve the product and make larger and more valuable your company (i.e. marketing, expansion, new services … etc) … and never working (pay wages, debts to suppliers … etc).
11. Use a pitch canning or not know the investor
Says very little about you as an entrepreneur you do not know who you are talking, what kind of companies it invests and how often work. Each presentation to investors should be personalized to the maximum for the person you are talking to their particularities, emphasizing the most important aspects for him … .etc.
Because if you have not taken the time to investigate the profile of the person you intend to raise tens or thousands of dollars … how do you expect that the investor is created you will strive to love your customers?
12. Use another to make the pitch
This is my opinion, although I know that is shared by many other investors. The CEO must be able to sell: when talking to customers, when talking to investors, potential collaborates, with employees. In addition, if an entrepreneur is not able to sell your project to a business angel or venture capital and need someone who will make the presentation and remain a discreet background.
That does not mean you have to do a professional speech and handled with gab, it is much less actually. Everyone cantus passes in front of an inverter, and at first, there are many who will voice trembles, sweat or move without stopping. However, they have had the courage to face such an ordeal, and it is something to value (although if you can practice at home, your presentation until it is smooth, better).
13. Not be committed
One of those points that always generate controversy … but it is important if you really want to get investment. When we talk you must be committed to talking to an investor not only is it you have to be dedicated 100% to the project (although as a few days ago we said we do not need to dive into the pool head, but once you’ve seen there is water there to make a decision). We talk about you or people in your environment (the famous 3F: family, friends, and fools) safe part of their heritage.
It does not matter if they are $3,000 … but it means that you are playing something like the investor its assets or funds are played. Because when things get tough (they will) and you wonder if it is worth this madness (that it) do not you let the first and you will continue fighting to get everything working.
14. Not speak of their role
Leave for the end one of the most obvious rookie mistakes, but not less common: spend all the time talking to the investor of your project and forget to give a basic answer to the question: WIIFM? (What is in it for me – And I earn?).You should never forget to explain clearly, why you want it, and above all, how much money you do win.
You should discuss the strategy exit your startup: how long you think it will be with you before you get out, how do you expect to make the company worth much more and of course, a scenario of how much you can win (forget please speak ROI or other … not to recover -solo- investment but make money with you).
Above all, the most important thing is not to worry and believe in your project. Nobody taught we were born, and most investors will not be far wrong to be nervous or you forget something. Be honest and tell them how you will change the world, you transmittals your enthusiasm and the great opportunity they have to accompany you on an exciting and profitable journey … and the rest will happen so it.