Things You Should Avoid As An Entrepreneurs While Talking To Potential Investors - ToOLOwl
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Things You Should Avoid As An Entrepreneurs While Talking To Potential Investors

Many start-up companies seek capital investment from their potential investors. However, they usually make some common mistakes while pitching the investors and talking to them. These easily avoidable errors can be statements made in their elevator pitch, in an email introduction, or even in the formal pitch deck they use to present. Here are some of the statements that you should avoid while talking to your potential customers.

  1. We do not have any competition: Every start-up has competition and saying that there are no competitors of yours shows that you are naïve in front of your competitors. Therefore, you should not say you have zero competitors, instead identify your top potential competitors from Google and explain why your company is better than others.
  2. Asking investors to sign a non-disclosure agreement before sharing any business information: Most of the investors do not have time to read and sign the non-disclosure agreement. If you are asking them to sign the contract, then you are just wasting time and putting a roadblock in your work. If you have some confidential information, then you should not include it in your pitch deck.
  3. Sharing good ideas with the investors and asking for the funds: To make the investors interested in your business, you cannot just showcase the ideas you have. You also need to show the progress in the business and any traction you might have already gotten. These tractions can include customer sales, website traffic, app downloads, strategic partnership with other companies or investors, and any press coverage. This way, you can be funded at an attractive valuation by your potential investors.
  4. We have just started, but we will earn millions in sales and profit in two to three years: No, you will not. By saying something like this, you will just show that your projections are not credible. Always remember that investors want to see a big potential upside in the business, but they also want to see realistic numbers and reasonable fundamental key assumptions. You should avoid making assumptions in your projections that are difficult to justify.
  5. We started the business as an LLC, and we want you to invest in that: The potential investors usually do not prefer to invest in Limited Liability Company; rather, they typically invest in preferred stock in C corporations.
  6. We have just started the company, but we believe that it has a valuation of millions: Remember that a potential investor will never invest in a company where the founder and owner have unrealistic valuation expectations.
  7. Our product will sell itself: No product sells itself. You need to show your investors that you have a complete understanding of your customer’s demands and needs. Also, you need to present a well-thought-out customer acquisition strategy, a coherent marketing strategy, and evidence that you understand customer acquisition costs and that you have a good sense of the lifetime value of customers.
  8. We are going towards a niche market: Many business ideas go after too small of an addressable market. Venture and investors are looking for companies that can grow to be big and result in good returns. Professional investors usually look for the “next big thing,” not the “next small thing.” Therefore, you need to think about how the business can scale to be meaningful and make sure you present it that way.
  9. Sending a 50 pages business plan: First of all, understand that your potential investors will be interested in a 15-20 slide pitch deck rather than your 50 pages business plan. Also, you should not make your investors go to Google Docs, Dropbox, or some other file-sharing service to get to the deck. Include it in your email as a PDF file.
  10. We do not worry about the marketing strategy at this early stage: This is one of the worst things that should be said to the investors. You should always have a market strategy ready with you. Remember that investors want to understand if you have reasonable plans to market your product or service. How can you cost-effectively get to prospective customers? How will you use social media such as Facebook, Instagram, Twitter, etc.? Will you do search engine marketing, and can you show it will be productive? What steps do you plan to take to get some rapid early sales? What are your anticipated marketing costs? Get ready with these things before conducting a meeting with the potential investors.

Remember these 10 statements that you need to avoid while presenting your business plan and pitch deck to potential investors.

SourceAllbusiness

About ToOLOwl

I am ToOLOwl. I have few friends in my nest; whenever someone requests a tool’s review or I pick a one out of my interest, someone in the nest does research on the tool, someone takes a tool’s walkthrough and some of them share their experiences and expert advice. Based on all; I give it a  stereoscopic vision and present important insights for you to go through and ease your selection process for tools. Wish you Happy reading, Easy choosing.

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