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Six Steps to the Perfect Pitch: Learn to Succeed With Investors - From a Guy Who Failed
Shortly after my college graduation, a few friends and I started a new media company. Within a few weeks we fleshed out the concept, wrote a business plan and set out to seek financing. With a little hustle, I managed to get us a meeting with a well-known investment firm to discuss the opportunity. Even though our business had yet to bring in a single dollar, and none of us had ever been the CEO of coffee shop let alone a multi-million dollar enterprise, we were all confident that we had a sure thing on our hands. After all, our financial projections forecasted gross revenues of $200 million. What investor could say no to that?
We'd be rich. All we needed to do was raise a small amount of capital--$15 million.
I remember thinking, “How hard could it be?” We were obviously, naïve, foolish and delusional.
There was one small problem with our plan. None of us had any idea how to pitch an investor. So I did what any clueless entrepreneurial upstart would do: Google searched “how to pitch an investor”.
Nothing that I read online could have prepared me for what was to come. We would quickly find out that our presentation was doomed before we ever set foot into the meeting. In reality, it was doomed before we started writing the business plan.
At the beginning of the meeting one of the investors asked me to hand him a one-page executive summary review. I hadn’t prepared a summary, so I handed him the first 11 pages out of the binder encasing my 95-page business plan. Strike one.
Less than four slides into my 32-slide presentation, the second investor interrupted me and said, “OK. Stop. I get it. You definitely don’t need $15 million.”
Defending our business plan, I overconfidently replied: “It can’t be done for less.”
“Really? It can’t be done, huh?” he responded with a smirk masking a hint of laughter. Strike two.
Both of the investors then proceeded to hit us with a barrage of questions:
“How much money have you personally put into your business? Anywhere near $15 million?"
“Why should I pay a bunch of twenty-somethings with no track record $100,000 executive salaries?”
“How much revenue has the business produced to date?”
“Why should I give you $15 million when the company hasn’t even made $15?"
“How can you possibly substantiate gross revenues of $200 million in year three?”
“Why are you trying to produce, market and distribute 10 products at the same time before you see if a single one sells at all?”
The questions went on and on. None of our answers were favorable. Strike three.
As you might have guessed, I didn't walk out of that meeting with a $15 million check. I later realized, however, that this was one of the greatest educational experiences of my young career. I learned more about real-world fundraising in 30 minutes than many entrepreneurs learn in a lifetime. To this day, whenever I pitch investors for capital, I always remember these six hard-learned lessons:
Are you a young entrepreneur with a unique venture? Email Scott about it at firstname.lastname@example.org.
Many more articles in Creativity & Innovation in The CEO Refresher Archives