About 30 days ago, I published My new job could be the best thing that’s happened to your startup idea. Since then, I’ve been inundated with replies, and I’ve met with nearly 30 companies. I’m sharing a couple thoughts while they’re still fresh because I’m guessing in another 30 days I’ll no longer find them unique, and I’ll probably just be another jaded, pattern-recognizing, lemming-like, hard-ass, VC type of investor. I kid! You’re all soft, warm and cuddly. I’m serious… come here and give me one those awkward bro handshake hugs… bring it in.
In no particular order, here’s a few observations and some tips for entrepreneurs pitching their startups.
- Don’t give the power away. When you’re looking to raise money for your company, it isn’t a one-sided evaluation. You need to evaluate the investor in the same way they’re evaluating you. There needs be a mutual opt-in for there to be a match. I’ve told people for years when they are interviewing for a job at startup, it’s a mutual interview. Sure the company might be paying you a salary, but you’re giving them years of your life, and really, what’s more valuable? Same goes for investor-entrepreneur relationships. The investor might be writing a check, but you’re the one committing time, making sacrifices, and giving up other opportunities to make this company work. You’re not going to the investor begging for a handout. Instead you’re bringing them an opportunity to participate in the success of all of your hard work. If you aren’t looking at it that way, then you might be undervaluing your business or yourself.
- Tears happen. I already made someone cry. I’m a self identified entrepreneur way before an investor, and I believe I have more empathy than most for the struggles of the startup process. Even so, within my first month of meetings, I came across so harsh that I made someone cry. This was a wake up call for me, and I’ve thought a lot about it since it happened. I think I fell into my own little Zimbardo experiment. If others are going to give you power, then you can start believing you’re entitled to it and act accordingly. I was shocked it could happen to me so quickly, and I’m working on never letting it happen again. For the founder, the lesson here is to look for investors who are more likely to have some level of empathy toward your cause. Most times, that will be an investor who has been in your shoes. That’s not a failsafe plan because I’ve obviously succumbed to the implied power of being an investor, but it’s a decent start.
- Listen. It’s really tough to be in “pitch mode” and also hear the advice that is being offered. You obviously want to explain your concept and respond to the comments/questions the investor might have. Here’s a good rule of thumb: If an investor asks the same question or raises the same issue twice, then your first answer wasn’t good enough for them and you should ask the investor to explain their question in more detail. Then write it down. Then go home do one of two things. 1) write off that investor as an idiot who doesn’t understand, or doesn’t want to understand, your business; or 2) come up with a way to avoid getting asked that question in the future. If it’s a valid issue about your business you need to tell your story in a way that answers that question before it’s asked again. You don’t want to be put on the defensive by allowing an investor to raise legit concerns about your business. Trial lawyers will always bring up the most damning evidence on direct examination first, before the opposing counsel can bring it up on cross examination. The evidence is the same in both scenarios, but it’s always better explained up front when you can control the narrative.
I’m still learning, but those were the few things that really stood out to me over my first 30 days.