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5 Huge Mistakes Entrepreneurs Make When Pitching To Investors

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5 Huge Mistakes Entrepreneurs Make When Pitching To Investors

When an entrepreneur pitches to an investor for a business idea, a very short window of time exists to be compelling and build trust. There are so many pitfalls to avoid during this crucial stage of building a business.

 

Real Estate guru and serial entrepreneur Cole Hatter spoke with Benzinga and dissected the five biggest mistakes entrepreneurs make when they pitch to a potential investor.

1. Not Getting Straight To The Point

Too much backstory won't keep an investor interested. Keep WIIFM (What's In It For Me) in mind when crafting a presentation.

"You don't want to be robotic where you just sit down and start pitching them, be cordial, but when it comes time get right to the point," Hatter said. "After the introduction, you should just dive into clearly showing the investor where their money is going to go, how their money is protected and how they are getting their money back. Just getting right to the point."

2. Lack Of Rapport

When approaching an investor, don't look at them as an ATM. Treat them like a real person and create rapport before asking them for money.

Hatter explained, "People buy you. When an investor is investing in your product, you have to be someone they believe in. You want to demonstrate or exude characteristics and qualities that make people feel safe. Building rapport doesn't have to be asking about their children; its about making them feel comfortable with you as a person outside of your product. The product is what you're selling, but when an investor writes a check, they're buying you."

3. Lack Of Credibility

It's essential to either know the industry/product/market really well, or have a successful track record as a serial entrepreneur to be credible to a potential investor. Both sides of the spectrum can work.

"[Take for example] a woman with 25 years of industry knowledge but no entrepreneurial ability, I would write her a check because of her insane amount of industry knowledge and experience," stated Hatter. "On the opposite end of the spectrum, [if it] is someone that has no industry knowledge, background or experience but does have a successful entrepreneurial track record, I would also invest in that person because of the credibility that comes with their track record. I don't need both. I need one or the other."

4. Pitching Without Proof Of Concept

The pitched product or service should be more than just a great idea. The more market research and proof an entrepreneur has about a product or service, the more interesting the opportunity is from an investor standpoint. Provide tangible proof of concept, such as subscriber numbers to a free trial or pre-orders.

"Proof of concept means that you know its going to work because you've done the work ahead of time," Hatter added. "The last thing you should do is get really excited about an idea and then start asking for money. Entrepreneur's need to conduct market research to make sure that there's a need, that there's proof of concept in the sense that once this thing isn't only an idea but an actual reality, that its going to generate profits"

5. Pitching Only Because Of The Money Opportunity

Entrepreneurs need to actually believe in what they are selling and only pitch products/services they would use themselves.

Hatter elaborated, "You don't want to be a pitchman. It is important fundamentally to understand your product and use it personally to know how to best bring it to marketplace. I would never start a company and go ask someone for money for a product that I've never used or benefited from."

Cole Hatter is hosting the Thrive: Make Money Matter conference in San Diego, October 28–30. This year's conference will feature some of the greatest minds in the world of business, including Grant Cardone, Tai Lopez, Jack Canfield and Than Merrill.

Posted-In: Cole Hatter Grant CardoneNews Entrepreneurship Events Be Your Own Boss Interview General Best of Benzinga

 

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