This is something I hear a lot.
I talk about being pitch ready but many CEO’s looking for funding believe that they are pitch ready and that all I need to do is bring investors to the table. This is not so much a red flag in my world: it’s almost certainly a red card.
Today I will walk you through the objections I get when I talk about the importance of pitch-readiness.
They often take 10 minutes to say what they could describe in 30 seconds. Add to this the belief that it won’t matter because their business is so good that the longer they talk with investors, the more drawn towards them and their business opportunity they will be.
“They will understand it eventually,” is a commonly held belief, usually married with the reasoning that the more you say, the more likely it is that they will understand it.
Having faith in psychic pitching skills is often quite high. Answering a tough question with something not related will frustrate most investors. Concepts such as pitch readiness get shrugged off as an unnecessary waste of time and money. Ironically, then going on to waste a lot of time with investors is often a very frustrating process.
“I know what I’m doing.”
This is also something I hear as a frequent flyer. Thinking that you are so brilliant that you do not need to prepare for meetings with investors is a mistake. This is amplified if you have never pitched for funding before.
An indicator of not being pitch ready is someone who has made plenty of pitches for funding but not had any luck. Luck in this instance is relative.
Taking time to get to know what is likely to work, and what isn’t is something about that is worth investing in. Pitching is not just good for funding, it’s also good in a networking environment and in any form of communication.
What you think you are saying and what lands with investors are often very different
In investment it is certainly about relationships, but there is more to it than just that.
Having a good relationship with an investor does not mean that you will get investment. You may get more time to ramble on about things that were not asked for or that are not particularly interesting to that investor, but this approach is likely to go quickly downhill for those who don’t know you. Getting to the point quickly is essential in a pitch situation.
Wanting to get in front of investors before you are pitch ready is a bit like wanting to be thinner but not wanting to go on a diet. Not wanting to do the hard work will not change your results in any sort of positive way.
Nothing is set in stone in the funding game as there are exceptions to every rule.
However, the exceptions are rare. Charisma can be alluring to some investors, who will invest in the personality rather than the solid business idea. However, this is not something that happens very often. More often than not this is the equation that leads to funding:
Funding = Investor Ready + Credibility + Pitch Ready
Investor readiness is:
- having a great business, clearly documented in an investor summary
- a pitch deck that has been well thought through with clear goals and targets
- an exit strategy
Credibility is the amount of management and business exiting experience you and your team have. The management team is a huge factor in the assessment of any business. Do any of your team have company building/exiting experience? Sector experience is not as relevant here.
Pitch readiness is the ability to articulate the above points succinctly. This is not something that many people talk about in the funding world but I can tell you for certain that a lack of pitch readiness will massively hamper your funding efforts.
Self perception of pitch-readiness is obscured by thinking that your idea is so good that you do not need to think it through from the perspective of an investor. This is a mistake I see too frequently.
In the above pitch we have a good idea pitched very badly. Had they gone into the den knowing the figures and where the real money was in their business, they may have got investment. However, uncertainty about the figures along with an obvious lack of commercial focus was enough to convince the Dragons that this was not a safe investment.
Now let’s look at a good idea attached to a bad business opportunity…
Clay is very likeable and charismatic, but this clearly wasn’t a good business opportunity. His idea had no protection or agreements in place to back up the business case. Anyone could have replicated this product and sold it.
Had Clay waited for the mentioned MOD deal (if that was real) then he may have found himself in a very different position. Agreements in place and partnership/distribution deals give credibility to valuations.
Not thinking through your business case will almost always cost you in a funding pitch.
Because your average investor has listened to a lot of pitches, you need to show them that you have at least considered the aspects of your business case that will be important for them.
Because of the high number of bad quality pitches allied with the fact that 4 out of 5 businesses go bust within 5 years, this is a lighter look at the reality of the concerns investors have for many business funding ventures…
So, if you think being pitch ready is something you don’t need to think about when approaching funders, the odds are that it’s only a matter of time before you change your mind.
I often speak to people who are not prepared to invest in pitch-readiness, offering a success fee if I can get them the money.
I usually send these people on their way with an invitation to prove me wrong.
Some will, but most will not.
Why would any introducer open up their trusted investment network for someone who thinks that they know better than they do about what their investors like and how they like it pitched?
Those that make this mistake will likely soon find their investor network(s) less receptive to them due to the high time-wasting potential of those introductions.
If your pitch isn’t working and you are not prepared to invest in your pitch readiness, why do you still think your business is worth investing in?
Photo by Priscilla Du Preez on Unsplash