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Six mistakes to avoid when pitching to a panel of investors
Written by Bulelwa Mdanyana
4 November 2012

Here you are with this brilliant idea and you are eager to start your business but you realise that your brilliant idea will remain just that (an idea) if you can’t raise the money to get it off the ground.  What do you do in this case?  You need investors and investors are not just going to throw money at you just because you think your product is one of a kind – you need to prepare a great pitch. Pitching to a panel can be a nerve-wracking and daunting task. Here are six mistakes that you should avoid when you get the opportunity to make that pitch.


1.    Going unprepared

Just because you think you have a brilliant idea and you need help does not mean you're ready to raise capital. Even if you get an investor interested, nothing will bring the conversation to a halt quite like not knowing how much you want to raise and what you'll do with it. You need to justify to your potential investors, and give valid reasons why you need that money. Investors are always interested in the start up costs and cash flow projections. You will need to describe why the business is viable and do a basic financial analysis on the pay-back period, return on investment etc. 


2.    Sounding desperate

Lack of funds is usually one of the biggest challenging for start-up businesses, however when you pitch to an investor, don't sound desperate. Investors want to be connected to winning projects. If you come off as though this investment is the only way for your business to move forward, it seems needy and is unattractive to many investors, and can you can easily be taken advantage of. Show the investors what a great opportunity it is for them and eave them feeling like they have more to lose by not investing! 


3.    Not establishing the need for your product or service

If you don't understand or can't explain what problem you're solving and why customers would want to give you money, you will probably never get any investors to buy into your idea. As a business owner you need to have answers to these questions – who is your best customer? How much money does your business need? How much money will your investors make from investing in your business? And, how much money will you make from selling the product/service?


 4.    Speaking to the wrong audience

An important thing to remember about a pitch is you are talking to the investors and not the potential clients or customers. Once you have described the business and established the need, be sure to tailor your presentation to speak to the right person. This often means doing research before hand and identifying the aspects of your business that speak to the investor’s values or business interests. 


5.    Going in without a business plan

Once you have pitched your idea, investors will ask to see a formal business plan and financial projections. Have these documents handy because failing to have these ready could derail your investor’s enthusiasm. Your entire business pitch should be based on your business pitch. Once you have proved the need for your business, any investors will need to see the research and cash projections. At the end of the day, investors want to make money too, and the business plan will help them answer the question they are really interested in – what is in it for me? Make sure you have a few copies of your plan and distribute it before you start talking so you can refer to it to answer questions. 


6.    Being too confident

No mattter how great your idea is, how experienced and prepared you are, never come out as if there is a low risk of failure. Any sound investor knows the risks are high no matter how positive the pitch is. Keep your ego in check to avoid an ego-based pitch that most possionate entrepreneurs are tempted to give. The investor will know that you're not the "typical pitcher" and they will probably respect you for it.

 


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