The secret to getting an angel investor to accept your business launch comes down to understanding where others have failed before you. While their attempts may have been unsuccessful, that doesn’t mean yours have to be. Learning from your mistakes can give you the edge you need to succeed and attract the attention of a private investor to take your business to the next level. Here are the top 10 mistakes entrepreneurs make when it comes to pitching an investor their big idea.
1. Introduce an investor who is not interested
Sure, you might want a particular investor to generate your business start-up, but asking for a funder without permission can get your name blacklisted from the circle of investors. Stick with investors who have shown an interest in your market, as well as your company, for your best chance of making it to the top of the crop.
Recognizing which private investors are involved in your company before you introduce them can increase your chances of striking a deal and avoid a time-consuming dance with an investor who has no interest in doing business with you.
2. Excessive business plans
Having a complete business plan to provide an angel donor is a smart business move. Making sure it’s readable and easy to absorb quickly will set you apart from the crowd. Too often, entrepreneurs become obsessed with their idea and can overload a private investor with too many details that are just nuance to them. This can quickly cause an investor to lose interest since he or she does not have the time or patience to read the entire proposal.
Instead, try to include a short but detailed executive summary and PowerPoint presentation that they can read. They will be sure to ask you questions if they need additional details to make their decision. It’s better to give them the highlights in a concise and informative way than to bore them with your overabundance of information.
3. Not showing the market opportunity
During your presentation, it is your opportunity to show your angel investor the potential of the opportunity in question. You want them to start the journey with you and you need to seize the moment. Show them the possibility of the market and let them see the flourishing potential before them.
Assuming that your private investor is already committed to the market may be a mistake you may regret. He should use his presentation as an opportunity to inform and educate them about what he knows and what he is wholeheartedly excited about.
4. Ignore your competition
Entering a field where you choose to ignore the competition may not be the best move, as your seed investor is well aware that you have competition. They want to know who they are and how dangerous they are to your business startup.
Do your homework on your competitors and be prepared to tell your business angel what separates your startup business from your established company and how you plan to outperform them. If you go in with a plan of attack and recognize your competitors, you will do better and also show your industry expertise.
5. Not showing how the product works
Giving a pitch to an angel investor can make even the most confident entrepreneurs nervous. This may explain why many first-time start-ups don’t show how their product works. They forget about the whole demo aspect of the field and the actual part of the show that helps seal the deal.
Let your business angel know what problem your product or service solves. Be sure to explain to them how it works. Give them samples and make sure that before you send your speech they understand it as intimately as you do.
6. Leaving the team aside
If you bring your team to support you in your angel investor pitch, don’t forget to include them in the pitch. They are a valuable part of your business and you need to showcase your skills and talents. Let them help deliver the speech and use their areas of expertise to your advantage.
Angel investors like to see all the people who will help a startup thrive, and a good team behind you can help you move to the next stage of the funding process.
7. Unrealistic grades
Going into an investor pitch with a sky-high valuation may not be the best strategy for gaining the interest of your seed funder. They will immediately shut down at the impractical number and show opposition to the rest of your speech. Be frank in your assessment and be willing to back up the number you’ve provided.
If you think his assessment is correct, go ahead and trust his decision. Show your investor your value and provide evidence to support your valuation during your presentation.
8. Do not investigate, your investor
One of the most important things you can do as a new business looking to attract an investor is to do your homework before you meet. You need to know your business interests as well as your achievements and be able to recite your story back and forth. The more you know about them the better as you can be sure that they have done their homework with you.
Avoiding the mistakes other entrepreneurs have made can help give you the momentum you need during your angel investor pitch, and avoid the pitfalls others have become. Use these mistakes to your advantage to really impress your angel investor and close the deal you’ve been envisioning for your business startup.
