Was that a groan you just heard in the audience while presenting? A snicker, perhaps? Or maybe you just sensed that you lost credibility in some way. You've worked so hard on your business and conveying the opportunity to potential investors is so important to you, so how do you avoid some common pitfalls which frustrate angels?
Here are a few angel pet peeves to avoid:
Never say: "There's no competition." Of course there's competition! There's always competition. I once heard someone say that, before Open Table, the competition was a paper and pen. And there's potential for future competition, too. There's always the possibility that a large company with deep pockets replicates what you're doing. Saying there's no competition can sound naïve; however, addressing the competitive landscape thoughtfully and honestly while showing how you can persevere regardless is a smart move.
Don't get your market wrong. Be careful about citing market statistics. For example, you could tell your audience that the travel industry is $100+ billion dollar market, but the vast majority of this spending represents what people pay for flights. So, unless you're proposing to start a new airline and compete with the likes of American Airlines, Delta, etc., that's not your market! Be specific about your actual market. If you're proposing to create a service to lead consumers to last-minute flights, then perhaps it's more realistic to look at the marketing spend of airlines in particular as your potential market may be what airlines pay to attract consumers to purchase a flight, and that market is much smaller, albeit still attractive.
Don't overshoot and say something like, "If we only capture 1% of this market…we'll make a billion dollars!" Use bottoms up not top down analysis. What does that mean? If you're producing widgets, don't just say that 1 percent of the widget market equal x billions of dollars. Do the homework. Demonstrate the demand for your product. Show the revenue and costs per widget. Show how the widget sales growth occurs market by market and how you scale the business. Let investors see the growth on a unit by unit basis so that — in aggregate and over time — it is clear how you actually capture 1 percent of the market in practice.
Don't be too salesy! You know the saying "if something's too good to be true, it probably is?" Well, if you're pitching to an intelligent audience, you shouldn't need to sell too hard. Be authentic. Be honest. Establish trust. Use facts and research to support your case. The data should speak for you and paint a much more compelling picture.
You want to be optimistic (you're an entrepreneur after all!), but you also want investors to believe that you are pragmatic and really understand what it takes to make your dream a reality. And it doesn't hurt to avoid the angel pet peeves cited above to convince others you're a savvy entrepreneur. Good luck with your pitch!
Commentary by Alicia Syrett, the founder and CEO of Pantegrion Capital, an angel-investment vehicle focused on seed and early-stage investments. She currently serves on the board of New York Angels and is a recurring panelist on CNBC's "PowerPitch." A former entrepreneur herself, she now works actively with a number of start-ups on their advisory boards and speaks often in the startup ecosystem. Follow her on Twitter @aliciasyrett.
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