30.11.2020

How not to fail an investor pitch: mistakes in the pandemic

Irina Kalashnikova, CEO of GoTech Innovation, continues to talk about how startups should structure their investor pitches during the pandemic. Last time, we gave young companies advice on preparing a presentation taking into account the crisis time. Now we will talk about the main mistakes that a startup should avoid when communicating with an investor.

Do not spam

A startup can make the first mistake at the stage of preparation for a meeting with an investor, namely, bombarding hundreds of its potential partners with letters. “Cold” calls and emails will not result in you raising a large amount of investment. They will only overfill your schedule, which will consist of dozens or hundreds of online meetings, for each of which you need to prepare separately.

Our advice is extremely simple: identify those potential investors who are most ideal for your project. As we said in the previous article, do your due diligence. This will save you time. The fewer pitches you make, the more tailored for a specific investor each of them will be. This means that the chances of attracting funding will only increase compared to the strategy of “cold” calls.

Don’t overload your presentation

According to many investors and experts, the ideal number of slides in your presentation should be between 15 and 20. And the average number of bullets on each slide is between 3 and 5. Overloading with information will not lead to anything good. It is better to develop a series of additional documents that can then be given or sent to the investor for a more thorough study of your company.

In the covid era, the importance of viewing presentations from mobile devices has increased even more. Adapt the sent file for smartphones and tablets. This is, first of all, about its “readability”: do not use small print and do not put a lot of text on one slide.

The presentation file should not exceed 5 MB, otherwise there is always a risk that some email programs will not let it through. If you want to avoid sending a heavy file and upload it, for example, to Dropbox, Yandex Drive or Google Docs, do not forget that not all users are comfortable viewing documents on these resources. Better to be simpler in your actions – use an optimized PDF sent by email.

Don’t forget about a demo version

An unexpected demonstration of your product or service can have a positive impact. A short video can be embedded in the presentation, from which it will be clear how the product works and what benefits it will bring to the investor. For example, in online retail, almost 90% of shoppers find it helpful to watch a video of a selected product before purchasing.

During the presentation: keep competitors in mind and do market analysis

According to experts at Sequoia Capital, the two most important slides in the presentation should reveal the need for your solution right now and the size of the market you are entering. True, not all startups talk about this in their presentations. In particular, they mention the relevance of the solution in less than 50% of cases.

Investors are interested in the analysis of the competitive environment carried out by a startup. If you tell them that you have no competitors, then it sounds at least naive. There are always competitors – direct or indirect. And you are required to show the investor that you understand your market and know the competitive advantages of the proposed solution. In addition, do not forget that the investor may know the strengths of your rivals, so it is better to structure this section of the presentation providing examples why you are better than these companies.

Especially these tips become relevant in the current time of crisis. Investors are looking for breakthrough solutions that can shock the market and take a leading niche in their segment. Don’t come to them with local ideas.

Another point related to the pandemic is forecasting the risks that may arise in the future development of your business. It is clear that the coronavirus and its consequences were impossible to predict, but, in general, there must be some critical thinking. If you don’t think about it, then it will be difficult for the investor to believe in you.

Choose your priorities correctly

Another mistake pointed out by some experts is the statements of startups that the need for funding is more important for them than the investors themselves. This delusion is now encountered more and more often – the time of crisis leaves its mark. And this is understandable, since now for many entrepreneurs it is a really tough period. But on the other hand, for an investor, such behavior can be a signal that in the first crisis situation the leader of a startup will simply lose control.

A mistake in assessing the company’s growth may be similar to this situation. An investor will not be interested in a startup that predicts a small increase in revenue for the next 2-3 years. However, do not try to impress him with the huge explosive growth of your business. This, too, will be hard to believe. Try to find a middle ground.

It’s better to focus on today’s issues rather than telling the investor how awesome you will be in the future. You must prove that you are sustainable here and now.

Don’t shy away from answering difficult questions. Be honest

“Thanks for the question, I need time to look for information, I will send you an answer later.” It’s better not to answer the investor this way. Show that you are in complete control of your project. Give him the answer that he expects from you right now. And be prepared for the fact that questions may be asked not only after the presentation, but also during it. You need to switch quickly for confident answers.

Do not get carried away by the desire to win over the investor. Provide him only with honest and verified information, do not try to deceive him and avoid wishful thinking. If you are not completely honest with him, you will quickly lose his trust.

Some rules of online communication

These rules need to be mastered, since it is still difficult to predict when offline communication will be available in full. During an online meeting with an investor, you can make a number of mistakes that can seem like a trifle to a startup.

Let’s start simple. Don’t be late for the start of your online session. Do not pretend that you were in a hurry, you had a huge number of things to do, but still turned on 3-5 minutes later. You are at home or in the office. It is very difficult for an investor to imagine how one can be late in such an environment. Most likely, after such a performance, he will not want to entrust his money to you.

Make sure you can communicate without technical interference. Check the quality of the Internet connection, sound, picture. It is difficult to perceive communication when it is interrupted from time to time. As for the picture, be sure to have a good background. Do not put the camera in front of a light source, so the investor will not even understand what you look like. There should be no strange things, no mess or anything else behind your back that will create a negative impression of you.

Ultimately, take care of your appearance. Do not go online in a rumpled shirt or a T-shirt. But don’t go overboard with that either. Nobody forces you to wear a suit and tie.

The final

No matter how your communication with the investor ends, be sure to send him words of gratitude – via email or chat. It is important that you provide positive feedback. This way you will not completely lose touch with someone who may well help you in the future. Be friendly!

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