Pitching Your Plan To Investors

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Last week, WorkBar was joined by Jeremy Halpern of Nutter McClennen & Fish LLP, who spoke at our Brown Bag Lunch & Learn Seminar. Jeremy led a very interactive discussion powered by the initial questions our group had about investors, pitching and fundraising.  Below are the key points and takeaways from Jeremy’s presentation, ‘Tips on Pitching your Plan to Investors” 1. Be a punching bag for your #7

First things first! Create a list of ALL of the potential investors you can pitch to (which should basically include any and all you find!) After you compile your list, score each investor/group on a 1-10 scale and figure out who your TOP are!  When it’s time to pitch, NEVER go to your #1 first!  Pick a seven on your list and let them rip you apart!  This is your opportunity to learn what you’re doing well, but more importantly, what you need to work on, so act like a sponge and soak up all the feedback you get!

Where to start:                                          http://www.nvca.org                                                                                                                                                            http://www.angelcapitalassociation.org

2. Never talk about money, ex girlfriends or politics

What is this a dating column?  Quite similar in fact, pitching to investors is a lot like dating, think match.com.  It’s all about your credibility!  Investors invest in people, not ideas - Ideas are cheap and everyone’s got ‘em.

How do you build credibility? Through honesty and trust. No matter what your idea is and how much data you have, investors ask themselves, are you the kind of person they can trust, who will take their money and do everything you possibly can to return on their investment?  They want to know that you’re going to CRUSH IT –  Which means that they need to believe in YOU.

Maybe you don’t have ALL the answers, most times you wont.  But, you don’t need all the answers, what you need is a plan!  Don’t spin tales.. you’re end up running around in circles.  Instead, be honest and explain what you’re doing to find out.

3. Yes! I do have a problem with that!

Pitching 101, always start with the PROBLEM! The main thing an investor cares about is that there’s a problem and that there are a lot of people out there who are willing to pay to solve it.

In many cases, investors might not even care how you plan on solving it right now – companies change directions all the time!  You’re not selling your solution; you’re selling yourself and your commitment to the problem.  At the end of your pitch, the investor should believe that your willing to do whatever it takes to succeed – they want to know they can trust you with their money.

“I can listen to a whole presentation without you telling me what your solution is, I just care that there is a big problem.” Jeremy Halpern

But are you sure there is a problem?...           

The main thing entrepreneurs lack are research skills.  You might think there is a problem, and some of your friends may agree with you, but that’s not going to stand up in a room of investors, who by the way, you’re asking to give you money based on this research.

Take it to the streets, the nets, ask whoever and wherever; this is what your basing your pitch on, so take your time and do it right.  But before you do, and this is where most people make their mistake, you have to make sure you’re asking the right questions.  Asking better questions will get you better answers.  You want to ask open questions, for example, “If you had a tool to do X, what kind of features would it have? What would it look like?, Etc.”  If you find, after asking 100 people, that they’re not describing your solution, you might have to go back to the drawing board.

4. Oh but you’re different? So are all your friends who look like that!

Different does not equal better.  Example: No one wants poop flavored ice cream.

Better = Better

Figure out your value and where you compete.  Alternatively, acknowledge where you do not compete.

You may not be the best choice if a customer values x, but that’s not your customer and that’s not your value proposition.  Example: Porsche does not compete on price.

5. Secret sauce: Served hot!

Everyone’s got ideas; it’s a matter of execution and commitment. You’re probably not the first to have thought of your idea but you are the first to execute it, which is why it’s important to protect yourself and your business.  Hypothetically or not, every company has a secret sauce – a mixture of elements that protects them from competitors; think of it as a defense army!

Key defense elements include:

  • Contracts/Exclusivity Agreements
  • Relationships – Built on trust
  • Trade secrets

Note on trade secrets – People often think that the best form of protection is to immediately file for patents. However, filing for a patent requires you to disclose your ‘secret formula’ and make it public… This is why many people choose to keep their trade secrets, well, secrets!  Example: The recipe for Coca-Cola® is one of the oldest and most valuable trade secrets in the world.  It’s not protected by patent, copyright, trademark or any other government-granted monopoly – making every sip a mystery!

About the Speaker

Jeremy Halpern is a partner in the Business Department and the Director of Business Development for the Emerging Companies Group. Jeremy’s practice focuses on private equity, venture capital, and angel financing transactions, mergers and acquisitions, equity and entrepreneurial compensation matters, and general start-up support. Jeremy spends a large portion of his time connecting with and supporting the entrepreneurial ecosystem in New England. Concurrently, Jeremy serves as the Vice-Chairman of The Capital Network, a Boston-based non-profit that provides education to entrepreneurs seeking early stage capital, and as an Adjunct Professor of Entrepreneurial Leadership at Tufts University. He is currently a Connector in the Boston World Partnership and is the co-founder of BostonIDEA, an organization promoting the entrepreneurial community in Boston’s Innovation District.

Previously, Jeremy was the Managing Director of Evolution Advisors LLC, a Boston based strategic transaction advisory firm, and the Co-Founder and Executive Vice President of Business Development for MobileTek Corporation, a developer of PC based applications enabling smarter mobility for consumer mobile devices. Prior to that, he practiced corporate law with Goodwin Procter LLP and Bingham McCutchen LLP in Boston, and with Irell & Manella LLP in Los Angeles.

Jeremy participates with or is a member of MIT's Venture Mentoring Service, MassTLC, MDG, E-NET, ACG, REBN-East, MITX, Web Innovators Group and MobileMondays.

 

About the Author: Evona Niewiadomska is the Events and Digital Media Manager at Workbar.  As of January 2013 she is an independent Digital Media & Design Creative with a specialty for infographic design and social media strategy.  Check out her website, evonawiktoria.com or contact her via email evona.wiktoria@gmail.com or twitter @evonawiktoria.

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