Pitching Investors 101

I was recently asked how to effectively pitch a potential investor. Becoming a bankable brand isn’t easy. Let’s get this fact out of the way. I know of a woman-owned business, with millions in the bank, that didn’t become bankable until five years after her business started. What your business and brand is worth and what investors are willing to invest are two very different things.

Obtaining a bank loan or any investor isn’t possible until you are able to prove your business is not only making money, but capable of growing the profits you do receive. You have to be self-funded for a few years before you can consider any real bankability. Some people are, however, able to find investors early on. While your business is growing, investors who want major stake in your company will find you if you make a profit within the first three years. The problem with this is the investors will eventually take creative control of your company and a heavy piece of your profit portion. In the long run, it is very rare that these early investors are even worth considering for funding purposes.

When you do get to the point where you are able to self-fund the majority of your business and prove sustainability- it is then time to seek out investors who desire less than a 15% stake return for their funding.

CNBC.com recently asked a number of investors to define the elements of a perfect pitch. Here are the top three investor answers for crafting the perfect pitch:

1. Know your audience – don’t talk about how great you are or your sales are. Talk about how your products and services provide a solution for consumer challenges. Do this by talking about who your customer is.

2. Do your homework. You have to know your industry inside and out – not just your business. If you can’t answer a curveball question about a competitor’s product during a pitch meeting- you will appear to be ill-informed and will not be taken seriously.

3. Don’t talk about how much your company is worth or will be worth. Talk about how you accomplished so much with so little and the possibilities if you receive funding. Real business investors can sniff out an exaggeration before an introduction is even made. If you are relying on solid numbers and facts- there isn’t anything to worry about. If you are talking up a big game about what you’re worth- you have everything to worry about.

I hope this helps you when starting to navigate the murky waters of corporate investing.

Best of luck,

Coco the CEO