by Nick Whitmore
For some people, angel investors are the only conceivable way of raising the funds required to turn a business idea into a living, breathing reality. Most people only ever pitch to an angel investor the once – so it’s important to get things right at the first time of asking. Often there is no second chance. There’s a fine line between success and failure when pitching to angels: Success could mean a life changing experience, failure can lead to a lifetime of regrets and “what ifs?”
Below are three scenarios that all entrepreneurs and startup business owners can learn from – don’t make the same mistake during your pitch!
Fail #1: Mine’s a Ferrari!
Amazingly, one entrepreneur I know of needed investment for a startup idea he had in the air freshener niche (random, I know). The angel he met with asked him the usual, bog-standard questions. Then he hit him with the “where do you see yourself in 10 years time?” curveball.
The correct answer would have been something along the lines of: At the forefront of the air freshener industry, innovating and expanding, pushing a hard line of growth and looking to acquire startups in the niche.
The entrepreneur’s actual answer was: Driving a Ferrari through the Everglades.
He didn’t get the investment and the angel laughed him out of the room.
Fail #2: Comical over ambition
I have nothing but respect and admiration for people that are ambitious in life. Ambition is one of the driving forces behind every entrepreneur – a desire to push the boundaries, change the way we do things and better themselves in the process.
When I first started a business I thought the phrase “over ambitious” was a bit of an oxymoron. You can’t be too ambitious, can you?
As time has gone by and I’ve networked with people from all walks of life looking to start businesses, I’ve realized that over ambition is a serious affliction. I had one guy telling me he was going to build a web store to rival Amazon on a budget of £1 million. I had another tell me he was building a rival to Facebook in his spare time – but he needed angel funds to pay for things like a server and some contractors that could help with the site’s development.
Realistically Amazon and Facebook are too far-gone to be rivaled pound for pound. Angels are not stupid, they know that. When someone turns up and says “we’re going to do the same thing Amazon do but better, and we only need £1 million from you to do it” they immediately see a huge black hole for cash appearing before their eyes.
Be realistic and grounded. Don’t try and take on a multi-national corporation on a relative shoestring budget. Instead do something original and innovative.
Fail #3: Actually, I don’t remember.
The basic prerequisite of pitching to an investor involves presenting them with a realistic business plan, and knowing that business plan like the back of your hand. There’s no use pitching to an investor and having trouble remembering what you wrote in it.
Everything from the turnover in your first year of business through to your projected workforce size needs to roll off the tip of your tongue. If it doesn’t the investor will assume you’re just not that into it. And if you’re not that into it, they won’t stump up the money.
There’s a saying: Fail to prepare, prepare to fail – it rings true when pitching to angels. Just remember your pitch should be all about your business idea or company and its success, longevity and growth – the idea needs to be viable and realistic, and you need to show genuine interest and confidence in your business plan.
Nick is a published journalist, blogger and Managing Director at ContentWriting.org. Nick enjoys blogging about small business, marketing and current affairs.
epSos.de | Courtesy of Nick Whitmore