Whether you’re going on Shark Tank, pitching a business idea to a venture capital firm or asking for crowdfunding, making a strong case for your idea is the key to securing a good deal from investors.
Here are 7 other tips for pitching your business to get funding for your company.
1. Understand your investors.Research each potential investor so you can target your pitch to their interests.”It’s like going on a series of dates and having one script you follow, no matter who the date is. That approach is not going to work,” insistsJay Bigelow,director of entrepreneurship for the Council for Entrepreneurial Development in Durham, NC. “Do your homework, find out what the investors have invested in before, and what they like. Only pitch to those who have an interest in your sector — why waste your time or theirs?”
Pro Tip: “Go up to them and ask them what they want to hear,” says Shark Tank survivor David Toledo, who successfully pitched Power Practical with co-founder Caleb Light. “There can be all sorts of things that they want to know, and if you’re just up-front about it, they’ll tell you.”
2. Know your numbers. Know and understand key concepts and figures — profit-and-loss, valuation, cost of goods sold, sales and accounts receivable, operations, marketing and pricing — and prepare to defend them. “The best way to approach a pitch with investors is with data, with real numbers,” explains Stephen Hersh, inventor of Biaggi, another successful Shark Tank product. “You need to prove that people are going to want to pay for your product.” Solomon Fallas, founder of Shark Tank success story 180 CUP, adds: “You need to have sales data, you need to know your competitors, you need to know every single possible question investors are going to ask about your product and projections.”
3. Clearly articulate the business. Describing the business succinctly and demoing the product quickly takes a lot of practice. “Someone once told me that however long a meeting is going to last, every minute should be an hour of preparation,” Fallas says. The practice pays off. When Charles Michael Yim presented the Breathometer to the Sharks, he had his entire pitch down — including a product demo. His concise intro included what he wanted ($250,000 for a 10% stake) for the world’s first smartphone breathalyzer, the need for the product, how it worked and why he needed the money. In the end, he walked out with a million-dollar, 5-Shark deal.
Pro Tip: Shark Tank entrepreneurs Christie Barany and Courtney Turich worked hard on messaging before they got in front of the Sharks. “Having the key messages crystallized in advance, and making sure that regardless of what they asked or what roads they started going down, that we covered those key points before we walked out — that was critical,” Barany says.
4. Quantify your experience. “First-hand experience in an industry helps,” advises Vish Mishra, venture director, Clearstone Venture Partners, with offices in Santa Monica and Palo Alto, CA. So does first-hand experience as a target consumer or user — because you understand the need for the product. But even that’s not enough. Showcase that you’ve assembled a team that has the skills you don’t, that knows how to run a successful venture. That may be in the form of co-founders, service providers or employees. “Many good mentors are available for help,” Mishra adds.
5. Plan for scenarios. Develop a plan for the most likely situations: an offer to buy, an offer to invest, or a rejection. Bigelow suggests developing strong answers for these questions: What is the minimum investment you need and percentage of the company you are willing to relinquish to get it? What are your “walk-away” amounts? What are the amounts or terms that you’d still do the deal for, even though they may be painful? For instance, what if the investor wanted you to change the name, or source manufacturing offshore? “Rehearse the interactions several times with your trusted advisors,” Bigelow adds. “While the actual event won’t likely play out exactly as planned, at least you’ll be more practiced, and hopefully comfortable, being put on the spot to make a decision.”
6. Connect with a story. When Al “Bubba” Baker pitched his patented de-boned rib to the Sharks, his pitch was spot on, but it was his answer to a tough question that created an emotional connection with the panelists. Asked about a lag in his work on the de-boning process, Baker looked down, swallowed hard, lowered his voice and related that he’d given up on the business but got back into it after his daughter decided to quit track. He told her she couldn’t, and she said, “Well, you quit on the boneless ribs,” which prompted him to return. The powerful story resonated with the panel and he got his deal.
7. Look like a good investment. “Dressing appropriately isn’t just about looking professional. It’s about giving investors a sense of who you are and why your company is going to give them a great return,” says Charleston, SC–based style expert and author Lee Heyward. To figure out a wardrobe that makes sense, write down a few adjectives that describe what sets your business apart. “If your company is cutting edge, innovative and high dollar, then the way you present yourself needs to reflect that,” she explains. “A pair of outdated jeans and a polo shirt say the opposite, whereas a great-fitting suit makes an investor take notice. If your company is whimsical, fun and magical, a stuffy suit won’t make sense. Adding color and interesting details to your outfit will. For men, consider a blazer with a bright and fun pocket square. Ladies, wear a fun color or pattern in a flattering silhouette. Choose an outfit that makes you feel confident and embodies the essence of your company as well.”
Follow this advice to make sure your next pitch goes swimmingly, whether it’s in the Shark Tank or not.
Finding temporary help for your small business during the holidays can be a challenge. We share some simple, effective tips on how to find seasonal workers
David Steinberg, co-founder and CEO of Zeta Interactive, pivoting saved his company from failure.
Do you secretly envy the coworker with the slee...
The experience of creating presentations and then ...
Now that your small business is big enough for you...
As a small business, your company culture separate...
Have you heard of "coworking" yet? If...