When starting a business, bootstrapping is often not an option. Entrepreneurs must find other ways to raise money, which includes investors. Most budding entrepreneurs are completely new to the investor world and make huge mistakes when pitching their product. However, you can prepare yourself better if you know what mistakes to avoid.
Asking Investors to Sign a Non-Disclosure Agreement
This is an amateur move. Credible investors never sign non-disclosure agreements and aren’t interested in stealing your idea. They have too many deals to look at, and they’re only interested in a return on their money. Asking someone to sign a non-disclosure agreement before an investment pitch is a sure sign to the investor that you’re new to the game. Don’t embarrass yourself.
Sending Your Pitch Unsolicited
Investors get dozens to hundreds of emails per day with pitch decks attached. It’s routine for investors to simply ignore and delete these unsolicited emails; they just don’t have the time to look at all of them. However, they do pay attention to a referral. Use any means necessary to locate a referral, and ask for an introduction to the investor you are interested in pitching.
Not Having a Clear Business Description and Value Proposition
Getting in the door to an investor meeting is difficult enough. Once you’re there, don’t make the mistake of fumbling for words and having cloudy descriptions of your business. You should be able to state what your company does in 25 words or less and be able to explain your entire value proposition in 50 words or less. Time is precious in investor meetings, and clarity is extremely valuable.
A Huge Presentation or Business Plan
First off, forget a 50-page business plan investors will not read it, so don’t waste your time creating one. Instead, you need to put together a slide presentation in Keynote or PowerPoint. Your presentation must be boiled down to the absolute necessities a 30-slide presentation won’t do either. Put together a 10- to 15-slide presentation that includes customer problems, a product overview, key players, the market opportunity, the competition, your go-to-market strategy, user and/or sales information, financial projections, and funding requirements. Give or take a few slides, and you have all you need to make a first investor pitch.
Showing Unrealistic Projections or Valuations
It’s a huge red flag when investors hear, “The market for X is $100 billion per year. If we can get only 1% of that, we’re a billion-dollar company in three months.” Any statement along these lines shows that you are actually unprepared, not business-savvy, and dreaming. If you are pre-revenue, you can only expect a valuation of up to a few million dollars at most. Don’t go overboard. Do your homework on how to value a company and how to make sound financial projections. There are many mistakes that you could make when pitching investors, but these five are particularly notorious. Be aware of them and prepare yourself accordingly for your investor presentation.