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10 Things You Should Never Do While Pitching an Investor

ByScott Gerber,
business.com writer
|
Jul 16, 2014
Home
> Finance
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Nailing your investor pitch is an important part of clinching funding. But who hasn't known someone who bombed that conversation? So before you write your next pitch, keep in mind these surefire ways to lose a potential investor's interest as explained by 10 successful founders from YEC.

Related Article: 10 Great Pieces of Entrepreneurial Advice From 2014

 

 

1. Not Having Milestones

Potential investors want to know that they're going to get a good return on their investment. It's your job to make clear where the investor's money will be going and, specifically, what it will help you to accomplish. Investors want to see that you've thought through your milestones and have a plan for how you will be able to use their money to accomplish these. Tweet This Tip - David Ehrenberg, Early Growth Financial Services

2. Redundancy

I get this all the time. A sales call or pitch that could take 15 minutes ends up taking an hour because the person keeps repeating themselves. These are smart people you're pitching; they heard you the first time. Redundancy also makes a pitch sound unprepared, like you're stalling for filling space. Tweet This Tip - Maren Hogan, Red Branch Media

Related:The 3 Biggest Startup Financing Mistakes & How to Fix Them

3. A Lack of Expertise

A lack of background expertise in the idea you are pitching can be a turn off to investors. Everyone has ideas, but most are built on assumptions and stereotypes. So having background expertise in your idea will increase the odds of success, which is what an investor is looking for. Tweet This Tip - Phil Chen, Systems Watch

4. Not Answering Questions

As most of us know, investors have short attention spans. They want to cut to the chase and get straight to the point. Often, entrepreneurs are so engrossed in their pitch that they do not listen well enough and don't answer the potential investor's questions. Very soon you see the investor losing interest as they have 100+ other pitchers lined up for the month. Tweet This Tip - Karan Chaudhry, DropThought

5. An Incorrect Valuation

We see it on "Shark Tank" all the time. Companies that improperly valuate their businesses and are often off by 50 or 60 percent show that they would rather share incorrectly impressive numbers than the less-impressive, honest value of their business. It instantly discourages investors and sets you up for a loss. Instead, track your numbers and be as accurate as possible when reporting them. Tweet This Tip - Joe Apfelbaum, Ajax Union

6. Not Knowing Your Risks

Sophisticated investors understand the risks they are taking in investing in an early stage company. There is no such thing as "can't lose," and while confidence is appreciated, hubris is not. Knowing the risks specific to your venture and being upfront with your investors is a strong way to show your understanding of your business and its industry, as well as your honesty and integrity. Tweet This Tip - Peter Minton, Minton Law Group, P.C.

Related:A Guide to Risk Management for Sailing Startups

7. Losing Your Confidence

Investors are going to ask tough questions following your pitch. Losing your confidence when answering them is the worst thing you can do. If they think you can't handle pressure now, they certainly won't think you can handle it down the long road you're about to embark on. Tweet This Tip - Brooke Bergman, Allied Business Network Inc.

8. Vagueness

Investors rely on your ability to clearly state the pain points and the manner in which you solve them. It is your responsibility to be clear and precise with your understanding of the problem, the solution and how you intend to deploy that solution. Entrepreneurs can lose an investor's interest by being too vague or making far reaching assumptions about the business and potential return. Tweet This Tip - Andrew Thomas, SkyBell Technologies, Inc.

9. Not Pitching Your Team

Good investors invest in people. You'd better be able to paint a strong story about why this is the most qualified team on the planet to execute on your idea. Tweet This Tip - John Roa, ÄKTA

10. Asking Them to Sign an NDA

No one is going to steal your idea. Investors don't have time to steal it and they see NDAs as unnecessary at such an early stage. They also think you're a fool to be thinking about such trivial things (which demonstrates a lack of prioritization). Most of all, it shows a small sign of distrust. You don't have time for that when you really need cash. Tweet This Tip - Eric Siu, Single Grain

Related:3 Tips to Obtain Small Business Financing

Scott Gerber
Scott Gerber
See Scott Gerber's Profile
Scott Gerber is the founder of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Gerber is also a serial entrepreneur, regular TV commentator and author of the book Never Get a “Real” Job.
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