7 Mistakes Entrepreneurs make when trying to get Investors

There are certain mistakes entrepreneurs make when trying to get investors for their startups. Many entrepreneurs are not good at convincing investors or at least making presentations. If a person cannot present a good pitch, a venture capital and an angel investor may not agree to provide funding for the business. Following are top entrepreneur mistakes that you should avoid when pitching to the investor.

The elevator pitch is too long

One common mistake entrepreneurs make is that they do not generate a short and precise elevator pitch. However, an elevator pitch should take no more than a minute and should capture the attention of the investor in that one minute. Hence, to make a pitch that is both short and to the point, one must practice it beforehand.

Sending an unsolicited business plan or an executive summary

Never send unsolicited emails to investors, as they are likely to receive hundreds of them. Instead, you should find a mutual acquaintance in their network to tell them about your proposal BEFORE you email the business plan to them.

Sending too long of a business plan or an executive summary to the investor

One of the common mistakes entrepreneurs make is sending a 50 or 100-page business plan to the investor. Remember, no investor has time to review such a plan. You’d rather provide a 3-4 page executive summary and a good PowerPoint presentation to the investor.

If you are going to present the PowerPoint presentation, then make sure you use no more than 30 minutes. 15 minutes should go to the presentation itself and the remaining 15 minutes should serve as a time for Q&A. The presentation should not exceed 15-20 slides.

Not having a reliable team

If you come to a pitch meeting with a team that does not prove it is a good one, then no investor will give you money. Having a good working team means believing in each other and not contradicting themselves. Besides, you, as the CEO, should provide the members of your team with the opportunity of speaking and present their own ideas in a logical and a coherent manner to make the investor trust you and believe in your success.

Not having a coherent and factually supported business plan

Either the business plan or the executive summary you are going to present to the investor should be based on facts and analysis and never on mere predictions. So you must present a business proposal that will convince the investor that the market for that certain business is really big. To put it in other words, you should be able to persuade your investors that the business idea you are offering will make them rich in a short period of time.

Asking the investor to sign a non-disclosure agreement

Some entrepreneurs think their business idea is such a brilliant one that it should be protected so as not to be stolen. In such a case, an entrepreneur will ask the investor to sign a non-disclosure agreement before giving them the proposal. However, most investors do not have time and energy to sign such contracts and are more likely to refuse to look at your business plan.

Failure to come to a consensus with the investor

If you are asking someone for an investment, then you should be ready to make exceptions and concessions for them. Most of the time, an experienced investor will ask numerous questions to make you justify your ideas. Hence, you should view these questions as an opportunity to improve your business idea and achieve better results.

These are top 7 mistakes entrepreneurs make when pitching to investors.

Armen Margarian

Armen Margarian is an attorney with The Margarian Law Firm.

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