5 Common Mistakes to avoid during Investor Presentations
Making a great first impression is critical to traction when presenting to investors who have heard hundreds, if not thousands of qualified entrepreneurs pitch their companies.
While the “proverbial” perfect pitch is rare, avoiding these common pitfalls is instrumental in establishing the foundation of an eye-popping investor presentation.
Pitch Mistake 1: Poor time Management
In a 10–20 minute presentation, poor time management can be disastrous and lead to some pretty awkward follow up questions.
The Fix: Rehearse the timing of your presentation beforehand in order to move fluidly between slides/concepts while allowing ample time for Q&A. Giving investors ample time to test your key assumptions via the unrehearsed portion of your pitch is critical to making a good impression.
Pitch Mistake 2: Lacking Conviction
Unfortunately, not everyone is innately good at public speaking. Your team needs to understand this unless you enjoy self-destructive behavior and are hoping to confound the audience.
Think of your pitch as a sandwich; the business model is the essential meat of your presentation
The Fix: Forgetting to split the presentation based on parameters of employee expertise is an oft-forgotten yet easily avoidable problem. If your product is extremely technical, let the product expert discuss details and then hand over the mic to the head of marketing or the CEO to discuss broader terms and field questions. As the founder(s), you know your employees’ strengths and weaknesses when it comes to company specifics. Be cognizant of this and focus your presentation’s key themes accordingly if you want to avoid uncomfortable silence.
Pitch Mistake 3: Forgetting to Mention Your Business Model
That’s not possible, right? Wrong. Often people have an intriguing idea but fail to mention how their product can be implemented from ideation phase to a sustainable, defensible and revenue-producing enterprise.
The Fix: Think of your pitch as a sandwich; the business model is the essential meat of your presentation — forget to include the meat and you’ll have a vapid bread sandwich. Simply exclaiming that you are passionate about your company and believe you have a product that will alleviate a consumer pain point does not suffice as a valid business model — we are all entrepreneurs in our own minds.
Be direct and concise; make sure to discuss your business model in detail as it is the primary evidence in building the case that your company will not only succeed, but generate positive returns to the investors whom you’re pitching to.
As the founder(s), you know your employees’ strengths and weaknesses when it comes to company specifics.
Pitch Mistake 4: Don’t Preach Unrealistic Assumptions
Entrepreneurs love displaying their “hockey stick” 3–5 year revenue growth chart with 100%+ annual growth for the foreseeable future and investors love to balk at these charts because of their seemingly ubiquitous nature these days. Avoid a cliched exponential growth chart if you can’t back it with cold, hard data.
The Fix: Entrepreneurs and investors alike dream of creating/investing in the next “Unicorn,” yet the reality is that this billion-dollar idea is extremely elusive. If your financial models have conservative inputs based on recurring revenue to previously established customers and you still show 200% YoY growth in perpetuity — congratulations you may be the next Unicorn.
What is important here is that you provide accurate forecasts of everything from necessary funding to ongoing burn rate to annual revenue growth, as unrealistic metrics will be an instant deterrent to seasoned investors. Deviating from reality will hurt both parties in the long run.
Pitch Mistake 5: Never Underestimate Your Competition
Even if your company is a first-mover in terms of a product, there will be existing indirect competition within the industry (larger firms with more resources) and future direct competition if you succeed in establishing your brand. Underestimating this competition is a fatal flaw and will elicit incredulity from your audience.
The Fix: A common question posed by investors is: “Why won’t company X come along and either usurp your business model or corner the market with a cheaper substitute?” Unless you fundamentally understand the competition and, consequently, protect your product via patent or other legal measures, a company like Google or Facebook could bankrupt you in the blink of an eye if they feel threatened or intrigued.
Maybe your proposed exit strategy is to be acquired by one of the industry behemoths; until you can establish the viability of your product and prove strong, growing demand, you cannot assume that competition will wave the white flag. Remember that competition fuels innovation and innovation is a double-edged sword — at any point an entrepreneur could develop a superior product, making yours obsolete if you fail to quantify your competition.
- Jamie Maynard, MassChallenge Marketing
Originally published at masschallenge.org.