Entrepreneurs say: "We’re doing a deal with Microsoft (AOL, SUN, Oracle, etc.)"
Investors think: With a big company and a large deal, marketing and development resources can dither away your very limited resources even when they’re attempting to be your ally.
Successful version: "We may have an agreement with the world’s largest player in this arena. It’s important, but it’s not the destiny of this company. Our idea will succeed regardless of whether we are in partnership with them."
Entrepreneurs say: "Our financial projections are conservative."
Investor think: Every plan is right on, they show next year’s expenses and last year’s revenues. Investors know you aren’t going to make the numbers. But they pay close attention to the projections because it gives them a window to what you’re thinking, where you want to take the company, what you think it will take to get there, and how well you understand what it takes to sell in your industry.
Successful version: "These projections are our best estimate of what the future could look like. And there are some developments underway that make us feel very good about these numbers."
Stay away from these in your presentation
Here are some observations on areas where entrepreneurs frequently go wrong in pitching to investors.
1. Suspicious numbers.
Many times, entrepreneurs present profit histories that, upon further and perhaps more conservative examination, might actually show a loss. Others present growth curves that look like a hockey stick. When outrageous numbers show up on the overheads investors leave the room."
2. Droning on about technology.
Entrepreneurs who are scientists or engineers are prone to making this error. And once you lose an investor’s attention, it can be hard to get it back. Yes, the technical aspects of your company’s product or service are important as they deliver competitive advantages, open new markets or change the balance of power in an existing market but to investors, technology is not important in and of itself. Spend no more than three to five minutes discussing technology. Any more time spent on science is less time devoted to selling the deal.
3. Lack of audio/visual support.
Making a presentation with no visual support is difficult for all but the most gifted of speakers. Without a visual outline, if investors get distracted for even a moment, they may lose the context of the speaker’s remarks. The most effective presentations are accompanied by 10 to 15 slides, overhead projections or handouts that punctuate your remarks and give the listener a constant source of context. Don’t get too obsessed with visual aids, however.
4. No flowery corporate videos.
It’s a mistake to let a corporate video run for more than five minutes. After that amount of time, it starts to give investors the impression that management is trying to hide something or has nothing important to say.