6 mistakes startups make when pitching investors

For entrepreneurs who have to convince investors to raise financing, the effort in promoting their businesses starts from day zero—that is even before they launch their businesses. Pitching to investors is a lot like pitching to your customers, except the former is slightly more intimidating than the latter.

Entrepreneurs, even those with great salesmanship, can make some of the silliest mistakes when coming up with a presentation for a pitch. So, if you are a startup company founder looking to convince an investor, here are some of the most common pitching pitfalls you want to avoid.

1) Not doing their homework: Before you scurry along to an investor—or rather—even before you make an appointment, you need to first know all about your potential investor sand what could be their likes, dislikes, and interests. Who is this person and why would they invest in your company? Do they typically invest in your sector? Perhaps they know a lot about and believe in technology which is why they would be interested in your mobile application. Or, maybe they are passionate about academics and love promoting dissertation writers. Figure out why this investor is the “right fit” for your company.

2) Sending a plan without any references: Get this straight: references matter and they matter a lot. We’d like to believe that they shouldn’t, but unfortunately this is a trait embedded in human nature. Angel investors are likely to receive tons of thousands of proposals and requests from every nook and cranny of the world. Hence, competition is tough. But with a referral from their network, it wouldn’t take long to get their attention.

3) Not preparing for a normal conversation: While the “deck” is always important, you don’t want to get caught off guard when the investor asks you to answer simple questions rather than them having to listen to what you have to say. A deck is great to have at hand during the meeting but don’t make it the sole aim. Prepare for a normal conversation and use your deck only as a tool to reinforce your message.

4) Making the deck too long: Investors will certainly listen to what you have to say, but if it takes too long to get to the point, they might excuse themselves for another “commitment” they have to attend to. Prepare for even less than the time you may get. Typically a presentation shouldn’t be longer than 15minutes, but make sure you prepare for 10 minutes or less just in case.

5) Having no back-up data: You can’t rely merely on assumptions to reinforce your statement. This is the number one trap entrepreneurs fall into while pitching their proposals. Do your calculations and shove in the numbers. For example, calculating lifetime value, market size, expected revenues and costs are only a few metrics that are essential to validate your business proposal. Also, make sure your assumptions are realistic with detailed projections.

6) Not listening to suggestions: Another key point to remember is to always keep your mind open when approaching investors. Investors may present you with possible alternatives or suggestions that they sincerely think could benefit you, your business, and possibly their investment. You don’t want to dismiss these possibilities just because they weren’t in your plans to begin with. These professionals typically have a lot of experience dealing with all sorts of businesses and investments which is why they could be offering valid suggestions to justify the large amount of money they are offering.

Clearly, they are also interested in what you have to say since they invited you and are offering you advice. Go over these questions and propositions later on and let them know that you will. In the process you may have found yourself useful insight—one that you may have overlooked had you not listened.