9 Mistakes Entrepreneurs Make When Pitching to Investors

/
Home » Business and Entrepreneurship » 9 Mistakes Entrepreneurs Make When Pitching to Investors
9 Mistakes Entrepreneurs Make When Pitching to

Investment is an integral part of your startup, and securing it is not as difficult as it sounds. With the proper preparation and planning, you can nail down your pitch to interested investors and get funds for your startup. 

You wouldn’t want to present an unprofessional pitch which might leave them reaching out for the doorknob instead of their checkbooks. 

The 17 Biggest Mistakes Startups Make With Their Investor Pitch Deck |  AllBusiness.com

Below are nine mistakes you should avoid to maximize your chances for investment. 

1) Not preparing an executive summary

A private investor may not have time to read through your business plan consisting of over 100 pages. The wise thing is to prepare a summary and a presentation that covers your whole business. 

It should include the following:

  • The unique selling point of your business
  • Target audience
  • Market size
  • Projected revenues and expenses
  • The exit strategy

2) Being unaware of market competition

It is often the case when entrepreneurs fail to address who they are competing against in the market. It shows that they have not done the homework correctly. Investors may already know the competition around your product or may ask you to identify them. When you’re pitching, it is imperative to know all the answers to investor’s questions.

You should also identify how your product differentiates compared to other competitors in the market.

3) Not preparing a demo

Always have a working prototype of your product or service to show to your investors. The demonstration will give an idea to the investors about what your product is and how it works. Ensure that your demo is working fine before presenting it to an investor, as a buggy product can cause them to pull out of the deal. 

4) Not being able to answer questions

You have to prepare for difficult questions you might face during the pitch. Leaving them unanswered or getting confused won’t leave a good impression. Questions show that the investor is interested in knowing more, and they help both of you to engage. 

Try to answer the questions on the spot instead of delaying them. Investors will check whether you have an understanding of your business.

5) Not highlighting your team’s experience and credentials

At times the investor doesn’t invest in the product but the person and the team behind it. That is why it is vital to have a team with the right skills, experience, and temperament. It would help convince the investor that an excellent team is behind the product. 

Some of the questions you can anticipate will be related to your team, so make sure you do your homework. 

6) Not having an exit strategy

Investors will be interested in knowing how their money will be used and, ultimately, how they will benefit from the investment. Preparation is necessary to discuss how the ownership will be distributed, the investment amount, and the proposed burn rate.

This phase will test your negotiation skills and would have a long-term impact on your business. So make sure you always have an exit strategy to prepare you for that.

7) Not discussing the valuation

If your business is a startup and you haven’t generated any sales, it is pointless to value your business initially. Instead, wait for the investor to pose this question and then discuss the worth of your idea. 

Otherwise, an investor will ask you to back your valuation in terms of sales and profit, which are negligible in the case of startups. 

8) Focusing too much on the product

You can go on and on telling investors how brilliant your product is, but it wouldn’t be enough to convince them to invest. You have to identify the need for your product in the market.

Share a compelling story about what your product was designed to solve to make it more relatable and exciting. If you cannot prove the need for your product, you won’t walk away with any funds. 

9) Being overconfident

Why Narcissistic Leaders Are Prone to Overconfidence – Association for  Psychological Science – APS

Although being confident can be a good thing, you might be seen as arrogant if you exceed a specific limit. The investors won’t think of you as an investable person and will likely pull out. 

You must remain humble throughout the pitch and answer questions with grace and charm.

Final thoughts

As an entrepreneur, you must realize the importance of preparation. You can easily nail your pitch and get your dream investor on board with a little bit of hard work and homework. Make sure to get your numbers and figure sorted and do preparation beforehand. 

Osmos Cloud

osmoscloud.com

Interested in learning more?​
Subscribe to get our latest resources sent directly to your inbox and gain early access to our webinars!​