Pitching is both an art and a science.
Entrepreneurs walking into a pitch have a very optimistic mindset, but as an investor – by nature you have to be objective. The pitcher’s role is to try and gain the investor’s confidence and convince them that their product, their service – their creation – has future value and that it’s going to grow, and that the investor will benefit from financial involvement.
There’s not one method of doing that – ultimately, it’s about human persuasion. An investor may not understand everything about an entrepreneur’s business, but self-assurance and confidence can carry a pitcher through and ultimately sell their business. That can intrigue investors and make them want to find out more, and that’s effectively the first hurdle of fund raising: finding people who want to hear more about your product and the opportunity at hand.
“Where many people fail is they’re either trying to sell the whole thing on Day One, or they don’t understand what an investor wants to hear,” says Christo Yotov, resident investor at Innovation Warehouse.
“That can be a myriad of things, ranging from what kind of return I get, to understanding your own product, to being able to execute and understanding both the micro and macro landscape. So that’s why it’s both an art and a science. There are milestones and checkboxes needed, but it’s also about the way the information gets put across. There isn’t a one-stop-shop answer.”
The pitching process can see nerves frayed and egos bruised.
“I’ve seen presenters getting upset at people asking too many probing questions and I can understand this, because quite often these people are young, less experienced and take it as a personal offense. Questioning an idea’s validity can sometimes be taken as questioning their abilities or their knowledge and hard work, and in some cases that’s probably true,” says Yotov.
“But to take offense is fairly short sighted. Entrepreneurs have to realise that investors are risking their capital and you are risking their time – both are valuable, and investors need to know what they are risking it for.
This principle goes for investment across the board – in any environment where you are managing capital, especially other peoples’ capital, there is a responsibility to make sure that money is going to the best home.
“You have to kick the tyres. If you weren’t doing that you’d be irresponsible. That is the job of any investor: it’s to be a pessimist, assume that you’re over optimistic, assume that you’re unable to execute and that your idea sucks… until proven otherwise.”
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