Shark Week is over a month away but Shark Tank seems to be popping up in my life a lot lately. Last month I was excited to learn that the show is doing an open casting call for entrepreneurs in my home state of Maine; for the last few weeks the show is all everyone seems to be talking about; and last week I met with a client who will be appearing on the show to review his business plan and help him prep for his pitch.
Since Shark Tank is all the buzz lately and because I’d love to be able to help some of my fellow Mainers shine on the show (even though I’m only a part-time Mainer now), I decided to make a quick little infographic to share some tips. Check it out and make sure to read to the bottom for an opportunity to get some personalized advice from me, for free 🙂
Today we’re going to talk about your investor pitch…not in the way you might expect, though. I’m not going to tell you what should be in your pitch deck and how to make sure you wow the investors. Obviously, all of that stuff is important and I have a number of other videos that address those things. Today though, we’re going to talk about how your pitch is actually a strategy tool.
As you begin building out your investor pitch, you’ll need to tell the investors the story of your business and explain to them why it would be a good decision for them to invest in you. That means you tell them about the problem you’re solving, the size of the addressable market, how you’ll get access to that market, how you’ll deliver your solution to them, and why you and your team are the best people for this job. Clearly, startup investing is one of the riskier investment strategies out there, but these investors are still trying to mitigate their risk on the investments they make within this very risky asset class. Your job is to make them believe your company, with you at the helm, has the greatest possible chance for success. Additionally, you have to do all of this in a very concise way because you don’t have 5 hours to make your pitch.
Someone once told me that a person’s ability to explain a concept in the simplest, most straight-forward terms is an indication of his/her understanding of that concept. Said differently, if you can’t tell your company’s story in a quick, concise, and compelling way, it’s likely that you don’t totally understand that story yet, and that’s an issue you want to address before you get in front of investors.
As you begin building your pitch, pay extra attention to those areas that you’re having particular difficulty with because it probably means that your strategy isn’t fully fleshed out in that area. For example, you want to know what problem you’re addressing and for whom. This should take 2 sentences, max. You can probably do it in one: A snow-blower clears snow from driveways and sidewalks in a much faster and less physically taxing manner than shoveling and is perfect for those living in areas with more than a few inches of snow fall per year. Done. If someone asks me what a snow blower is for and my response is, “Well, you know, in some places there’s a lot of snow and it’s hard to shovel, or people don’t like to shovel, and you just start it up and push it along and then you don’t have to shovel but your driveway gets cleared, so it’s good, because lots of people have heart attacks shoveling their driveways, you know, and this can help you avoid that. Or for women or older people too. Or just if you’re busy, because it’s faster.” Um, whats?!? Clearly, this second person has some idea of what the problem a snow blower solves is, but s/he isn’t fully clear on it or this rambling response would not have happened.
Let’s give another example: your ask. You’re pitching investors because you want them to invest money in your startup, so you have to tell them how much you need, right? And when you ask for that money, you’re going to have to tell them what you plan to spend that money on and how it will help your business grow to the next level where you can either raise another round at a higher valuation or be making enough money to grow on your own, right? So what’s your answer to how much and what for? If you can’t clearly state how much money you need, how long it will last you, and what you’ll use it for, you need to keep fleshing out your strategy before you get in front of investors.
This isn’t just and issue because an investor won’t like that you can’t explain your plan. It’s an issue because it means you don’t have a plan and we’ve all heard the refrain that failing to plan is planning to fail. An investor doesn’t like a lack of clarity because it’s a bad sign for your business…that’s my point here: if you’re unable to craft a detailed and compelling pitch it’s almost certainly because you don’t have a detailed and compelling plan or story to tell.
In the words of Alejandro Cremades, the Co-Founder and Executive Chairman of OneVest, “Your ability to tell a concise, compelling story about your business is a sure shot barometer of your own strategic clarity. So, use the pitch development process to actually improve the truth you’re telling.” [Click here to tweet this quote!]
As you craft your pitch, take note of any weak spots in the presentation and address them as weak spots in your strategy. That way, the exercise of improving your pitch isn’t just an exercise in good presentations, it will actually help your business’ chances for success.