Whether you’re for the first time ever or just the initial round this week, your mission is to incite their passion and provide compelling evidence of a potential boost to their bottom line.
And you will likely have less than 10 minutes to accomplish this and will compete against dozens of other businesses in need of capital.
As CEO of a medical device startup that has raised tidy sums to date, I offer my insights. Don’t do any of the following or you’ll blow your pitch by breaking these fundamental taboos:
1. Don’t pitch every investor in your database.
Making a successful investor connection is more like using Match.com and less like kissing a lot of frogs before meeting your prince. Research what individual investors invest in and be sure to heed their criteria and industry preferences. Investors have limited time and focus on specific industries. If you reach out to every investor, you may fail to get to know the ones who can help your company thrive. Pitching to everyone on your list can harm your reputation when you go looking for capital for your next big idea.
2. Avoid cold calling each investor to book an appointment.
Always get an intro from someone an investor respects. According to Business 2 Community, only 2 percent of cold calls lead to an appointment. Investors often cite a cold call as reason to filter out those not advanced enough to research and prospect correctly. Additionally, today most people view phone calls as a major interruption.
3. Don’t assume your solution solves a big problem.
Assume nothing! Be sure your solution solves a big problem. Most businesses aren’t worth investing in because the upside is too limited. Investors seek to invest in low-risk, high-growth products and services that will return a profit.
Your product’s solution should be supported by research and the problem must be worth solving. After all, if consumers don’t see something as in need of a fix, investors won’t either. For example, as people sought ways to use their smart phones to perform tasks, the folks at Nest.com saw a need for a remote control for the homes and invented a suite of products to cost-effectively program temperature and security functions.
4. Steer clear of industry speak.
Every industry has its jargon. At its best, such language provides shorthand to let insiders communicate with ease. At its worst, some phrases bastardize the meaning of words and confer an air of truly unwarranted self-importance. Obviously in a medical or technical field, specific terms are necessary for clear communication. Be smart about learning and using those words correctly. I had to master some medical concepts to effectively speak on behalf of my startup.
5. Don’t jump into a crowded category.
If you’re considering launching a startup in a business category with a lot of existing players, be sure your company is differentiated. In the over saturated cupcake market, Cupcakes by Melissa markets… (Read More)
Article by: Bryant Guffey
Published at: Entrepreneur.com