Every business requires funding to carry on its operations. Entrepreneurs need to pitch to the investors to get the required funding. And most entrepreneurs don’t have the experience to make the best pitch. It’s essential to make the investor interested in the business for them to invest.
Often entrepreneurs make ample mistakes. Some of the mistakes to avoid include:
Sending a business plan or executive summary unsolicited
Investors usually don’t go through pointless emails. It’s because they get several emails, which they can scan and choose to find the most important one to read. However, they will pay heed to an email when it comes with a reference in the network. It could be a lawyer or another venture capitalist. You can leverage this point.
Not knowing the investor preference
There are a few investors who are only interested in the biotech sector or mobile application development. Entrepreneurs often send a pitch without knowing the investor’s preferred area of investment. Hence, it is necessary to do the homework first and then approach an investor.
Not highlighting the reason behind the market opportunity
The majority of investors are in the lookout for businesses that can expand and make profits. Hence, it is necessary to address this aspect directly to get the investor interested. It would be best if you refrained from presenting the small concepts and ideas. If your initial product or service is small, you should categorize your start-up venture as a “platform” business, which has the scope to develop multiple apps or products. Entrepreneurs should also highlight the target market and the market percent that they aim to acquire within a period.
Bring your team for a meeting where only the CEO speaks
Investors are keen to know that you have a competent team. So, when you only allow the CEO to speak in the pitch meeting, they get the wrong notion. Investors need to know and understand that their team members are efficient. And that is not possible to judge or gauge if it’s the CEO only who speaks. Hence, the team members must share their viewpoints for the investors to decide correctly.
When entrepreneurs tell investors that they don’t have any competition
If you tell the investors that your business has zero competition, you will be setting up an unrealistic case. There exists some form of competition, whether it’s direct or indirect. There will be a brand that offers a substitute solution of what your company offers. And it is necessary to make competitor analysis and show the investor that you have a thorough understanding of the market.
Highlighting unrealistic or uninspiring projections
Every investor will be interested in knowing where you see your business 5 or 10 years from now! And here, you need to place realistic projections. If you highlight that you can attain $5 million in 5 years, that will be a complete deal-breaker. Investors are interested in real-time business opportunities. So, all you need to do is understand your company’s potential and share a realistic projection to get the investor interested.
Getting an investor interested to invest in your business is challenging. Once you avoid the mistakes mentioned above, you can get the best investor for your business.