Regardless of whether you are pitching to VC’s, angel investors, finance houses, friends, family or fools; a high number of start-ups, like many fledgling ideas, suffer from the following proverbial curveballs during the pitch:
- 1) Over-enthusiasm and excitement
- 2) Paralysis by analysis
- 3) A disregard or convenient avoidance for the numbers
In my experience, both as an entrepreneur and through conversations with fellow entrepreneurs, many of whom have been successful others less so, the emotion & passion an entrepreneur associates with their business will most certainly not be mirrored by those listening to the pitch, even the most loyal family and friends.
These family members and friends would, quite rightly, be just as mindful of donating their hard earned cash for a “punt” as some VC’s and Angel Investors, but pitching to this home crowd is always a good place to start for any fledgling entrepreneur wanting to earn their spurs.
I found that some of the questions asked by family and friends were basic hygiene considerations that in hindsight I should have pre-empted. However, with every pitch comes a learning experience with the culmination of a pitch perfect delivery that is both polished engaging and robust. Well that’s the aim anyway.
In my previous incarnation as a medical professional, I profess to being guilty of delivering such an overly eager pitch to a business group and it is fair to say that my high energy and over-zealous request for funding did little to mask my lack of commercial considerations necessary for a successful investment pitch. Needless to say, that on this occasion, additional funding was not forthcoming.
Not only can this lead to a lack of securing the next level of investment necessary (as per my experience above) but can also knock confidence in both the business and for the entrepreneur himself.
This would be a shame for all concerned and I wonder how many good ideas and products never made it to market as a result of the above.
However, the entrepreneur by nature needs to grow a thick skin, be reflective on what went wrong, make the necessary corrections and use the feedback as motivation to help digest the setbacks and often brutal critique. Being tenacious and remaining resilient without allowing confidence in either yourself or the business to drop will be critical to any success.
Despite several bruising but ultimately educational pitching experiences, I was not to be deterred and was fortunate to undertake the Entrepreneurship elective as part of my MBA at Ashridge Business School. Even now recall the detailed lectures, the dragons den style pitches and incalculable hours spent religiously reading & discussing both the business and the pitch with other members of the MBA cohort. Good fun it certainly was but also incredibly hard work trying to fully address all the internal and external factors, many of which the entrepreneur cannot control, that underpin the business case.
Then there is the all-important question about knowing how and when to think about an exit strategy, something which all entrepreneurs should have in mind early on!
This is where paralysis by analysis rears its unwelcome head and from my conversations with fellow entrepreneurs was the red thread that came through. Trying to detangle the commercial considerations from the sexier “This is what my product can do” lends itself to the typical and lazy pitch: “If I can only get 1% of the market, my business will generate XYZ….”.
This is where we get to the dreaded numbers game. Alas, in the event of an unsuccessful pitch there is no token gift in the form of a countdown clock at the end but instead another stark lesson from the audience , perhaps politely, that you should but that you really don’t understand your numbers, what they mean work in the context of the financial statements and their implications for your business. However, very few of us, without some finance knowledge will understand or articulate the numbers competently so this can be excused surely?
So, you would think, but speaking to a successful entrepreneur who has launched several businesses , both here in the UK and India , he was happy, after some cajoling, to admit that even he falls prey to one of the three curveballs above. Although, he readily admits that as a result of some unsuccessful pitches he has now tightened up on his financial knowledge and his projections for the business. His rationale is that even if he is struck by the paralysis bug and cannot provide all the answers to the business case, he can claw back any confidence lost in both his business and also in himself as an investable individual by projecting commercial credibility with a grasp for the numbers and the business financials.
After all, the investors want to make a return on their investment so by knowing your numbers straight of the bat helps them with their own internal decision-making process.
So, perhaps the soundbite “it’s all about the numbers..” is true and it’s the ROI that carries the greatest weight in determining the success of a pitch. However, individuals are also investible so tackling the other 2 curveballs may yield unexpected successes when the numbers don’t quite pass muster.
Without the pitch you will never know