FAIL: 12 WAYS TO BLOW YOUR INVESTOR PITCH

by David Brody

While there's no shortage of reading about "how to pitch for funding", from what we can tell, a lot of what's written isn't soaking in too well. So we thought we'd try a more unconventional approach.

Our team at North has put together a collection of some knowledge (and scars) we've accumulated over the years to point out the noteworthy wipeouts, awkward moments, and empty handshakes of new venture pitching. By first revealing what doesn't work, we hope to activate the other side of the entrepreneur's brain (the one that isn't always thinking about success…).

This following excerpt is taken from our latest presentation titled, Fail: 12 Ways To Blow Your Investor Pitch. You can get a copy of the entire paper (full of entertaining reference visuals and hyperlinks) at www.dontgosouth.com.

Ready? In no particular order, here are a half-dozen ways you can fail an investor pitch (and 6 ways you can fix it). Be sure to take good notes (especially mental ones…).

The Fail #1: The K-Mart Template Business Plan

Over 500,000 business plans float around the internet attached (by a fishing line and a bobber usually) to a hopeful entrepreneur dreaming that some day their 53 page (single-spaced) doc will be downloaded by a wealthy investor who will find their idea so damn compelling that they'll call frantically asking for the ABA routing number so they can wire you a suitcase full of cash immediately.

Well, if your first move is a long winded template style business plan you purchased from the digital equivalent of K-mart, chances are you're fishing with the Rocket Fishing Rod (www.spindirect.com/product_order.php). We hate to play dream crusher, but you aren't on a TV commercial, and these ponds aren't stocked with starving fish.

The Fix #1: Sexy Materials Get Noticed

One thing that book publishers know is that in order to convert a browser into a customer, you must first capture their attention at the shelf. Don't fall into the trap of thinking that just because your business has sound financials and a good product that investors will plow through a long boring document and uncover the genius inside.

An investor's belief in your ability and your concept's strength starts with the very first time they lay eyes on your business materials. Seriously, how is one to believe that your business will inspire consumers if your materials look like they were pulled together on a Commodore 64?

The Fix #2: Talking Up Your Awesome New Product

One surefire way to lose your audience is to jump right into talking about your amazing product. Yep, without the proper context your long winded rant about the crucial need for a rapid charge system for a 14.4 volt lithium ion battery is going to fall on deaf ears.

Chances are the person you are speed pitching isn't the target consumer. Think it through, if most investors aren't currently feeling the exact itch your product scratches, you need a different approach.

The Fix #2: Talk About Solving a Real Problem

Instead of talking about your solution, start by explaining the consumer's needs. While it's essential that you bring the investor to a point where they understand your product, understanding the buyer's needs is more important. Try telling a story about a real person (www.youtube.com/watch) who needs your solution. Take the audience to a place where they can see the world through that person's eyes. Help them feel that customer's pain.

Talk up the need for big holes first and then everyone will want to hear all about your six-ton super drill.

The Fail #3: Showing Off A Feature Bloated Demo

Okay adrenaline junkies, here is your big chance to see if you can get lucky with a live demo. Chances are if you've made it this far, you're excited, so geeked up that you'll probably veer off down a path that nobody else wants to go where you'll leave the listener confused and dizzy.. We call this the tilt-a-whirl demo…a dizzying array of irrelevant features and functions. Don't worry, everything that plugs in will usually crash (www.youtube.com/watch) anyway, so be sure to have an audible up your sleeve.

The Fix #3: Weave a Memorable Story Into The Demo

While your product demo is important, how you get the audience to that point is often the true difference-maker. So it's up to you to take investors on a journey into the life of your consumer and explain how exactly they would use your solution. Help us feel their pain.

Let us experience their joy when you save the day and chop the big bad wolf in half with an axe. And don't get distracted by all the pretty things to talk about (or look at) along the way, just get to the payoff in a clear and concise manner.

The Fail #4: Touting Top-Down Market Data

Search is a multi-billion dollar market, so you conservatively project to capture a measly .001% of the search market and make tens of millions per year? Sounds pretty reasonable…if there is a multi-billion dollar market then there has to be some room for a niche player to squeeze out a little of market share, right? Wrong.

Make sure your assumptions aren't wildly off base either, or you'll be hard-pressed to last long enough in a pitch to actually get the opportunity to defend them.

The Fix #4: Build a Bottoms-Up Business Model

When you talk about the size of the market, and how you plan to capture market share, start at the ground floor with your team and work your way up. How many consumers need what you have right now? Are within range for your team to contact and have the budget to buy? Assuming you can convince a percentage of those truly addressable consumers to pull out their wallets, what kind of growth can you realistically project? Tie it back to your sales team’s individual contributions if possible.

The Fail #5: Your Business Has Users, But No Revenue

"No margin? We'll make it up in volume!" Who could ever make that mistake again? Admittedly there are still a number of ventures that don't have a real revenue model, but are media darlings. Don't be fooled, the media also loves a good train wreck. Are you able to demonstrate that there is a thirsty crowd willing to pay for what you are offering? Yep, we said pay. Or are you living a K-Fed fantasy?

The Fix #5: Show a Clear Economic Model

Okay, this is important. If it takes a complex chart and excel to explain how you make money, you've missed the mark. We love to see a simple unit economic model for each stage of the business. Oh, don't be afraid to show year to year percent changes in costs, revenues, and profit (loss) so we can get a handle on how you see things changing over time. Are your prices realistic, or based on a hunch?
Bonus points if your data is based on actual sales…

The Fail #6:  You Disappear In Sea of Sameness

"But my idea is groundbreaking." You should think this way, it's your baby. Your belief in your concept is what gets you out of bed in the morning. Unfortunately, the odds are that somebody is already working on something similar to you. And guess what, that competition probably has a nice head start.

Psst, you can develop the best, most innovative product or service, but if nobody knows about it nor is inspired to give it a try, then you're just swimming around aimlessly in crowded waters. Bottom line: if your brand isn't differentiating and motivating, it's game over.

The Fix #6: There Can Only Be One

If you're going to inspire consumers to buy your product, you have to nail your customer-facing brand.

Is it compelling? Does it stand out? Does it resonate with your desirable target? Be able to confidently describe how you can connect with your consumer because your understanding of their emotional and rational needs is unmatched. No one said pimpin' was easy. It's a competitive game. So step yours up and show investors that you know how to bring your brand to life in a relevant and inspiring way.