In a raw, unfinished room on the second floor of The eFactory, four entrepreneurs made their startup pitches last week to some 180 attendees of the first Spin66 summit. At the conclusion, the audience voted via text message for their favorite.
Yes, we paid homage to “American Idol.” But there was another, more important, group listening in: a panel of four startup and investment experts.
In a near “Shark Tank” setting – without the glamour, lights and hard cash on the line – the panelists’ off-the-cuff remarks had a few common themes. Here are six practices would-be entrepreneurs should avoid when making their business pitches:
1. Videos tell the whole story better. Not always. In some cases, a startup’s best asset is the people behind it or their collective expertise. It’s harder to convey that in a video. Make People Better LLC’s clever 3-minute, 40-second clip told the startup’s story with hand drawings on a white board, but it was criticized for length. The constructive side of that is the personality and expertise of the presenter was preferred over the digital explanation.
“You are the best asset,” panelist Herb Sih of Think Big Kansas City told health caregiver-turned-entrepreneur Kerri Miller. “I wanted to hear more from you.” The upshot: Use videos wisely and accentuate your key assets.
2. Don’t brag. It’s OK to name drop in this environment, if it adds credibility or authority to the concept. Tell potential investors about your early client victories when they carry clout – like Ohio State University and Texas A&M for presenter Alumni Spaces. “There’s some secret sauce there,” panelist Doug Pitt of TSI Technology Solutions LLC said. Share your success stories, whether that’s working through the pains in product development or overcoming competition. Just keep the bragging in context and make it part of the content.
3. Forget the numbers. It’s easy for investors to find reasons to invest. Experienced investors are looking for reasons they shouldn’t invest, and once an entrepreneur can eliminate those hurdles, it’s smooth sailing to the cash. But investors need to see the numbers. That’s their game. Tell them where your sales are at currently, where you’re projecting them to go and how you expect to get there.
Also, detail how you’d spend the capital should they bite on your idea. As Polsinelli PC attorney Geoff Fasel put it to Alumni Spaces’ presenter Rachel Anderson, “Help me understand what your revenue looks like. Why $250,000?”
4. Cool products take the cake. While Falling Feathers’ duck calls are fun and trendy, and creator Kory Cribb is an ideal frontman, panelists threw caution on the limited business plan presented. Also, with products entering a market as big as the Pacific Ocean, it’s going to be a tough row to hoe to find exclusivity with your idea.
5. Strictly business, baby. It’s not all about ROI. Half of an investor’s decision is based on logic and return on investment; the other half is emotional. A buy-in agreement is an investment in the people, too. Panelist Dan Cobb of HealthMedX credited Alumni Spaces with recognizing the three partners even when two of them weren’t in the room.
6. Passion is all you need. Passion is noticed by interested investors, but there’s need for more in the entrepreneurial toolbox.
What about when you fail with an idea (and you will)? Passion often drives us to just push harder, when the smart thing to do might be to take a step back, reanalyze the market and make a calculated move. Hard-headed entrepreneurs have been known to remain persistent with an idea that’s not working only because they want to prove themselves right or uphold a certain reputation. Sometimes, a good counter to passion is just listening to others, to data or to our instincts.
Much like the room setting, the pitches were raw. Overall, their presentation skills left much to be desired. So it is when you put a microphone and PowerPoint clicker in the hands of a waterfowl caller. But that’s more reason I’m guessing the panelists’ remarks are hugely valuable to the presenters and, more significantly, to their chances of getting real money down the road.
Springfield Business Journal Editor Eric Olson can be reached at eolson@sbj.net.[[In-content Ad]]
