How NOT to pitch investors
Here’s a Jimmy Kimmel Shark Tank comedy sketch, on how not to pitch investors, we can learn a lot from because I’ve seen this happen for real.
Two biggest mistakes
1. Company valuation based on delusion
With no customers, how can investors put a value on your company? I came across a startup who told me their company was worth £20million. Only later I realised they didn’t have a paying customer. How on earth can you place value on a company when a customer hasn’t bought it yet? The value of your company is based on demand, not what investors say. And demand is based on whether your customers are willing to pay for it.
2. How to spend it
They didn’t know how to spend investors money. If you’re asking investors for money to grow your business, they need to know why you need it, which is basically where you’ll spend it. Profoundly simple yet often overlooked. I’ve seen this happen.
First get paying customers. This is your proof of concept. And these paying customers shouldn’t be friends or relatives (I’ve seen this mistake happen), but people who place value on what your product or service. When your customer is happy, get testimonials – this is your social proof. Then go get more customers of a similar type – it will be easier to do this rather than approaching a different “type” of customer.
Remember, your sales strategy will dictate your product or service, so be mindful of which types of customers you’re approaching. And here’s a powerful script to persuade customers to buy or try your product to get you started.
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