Business owners and founders having trouble getting the funding they need seem to be forgetting an age-old adage: Practice makes perfect.
A recent study by Intuit Canada found that 44% of Canadian entrepreneurs have been turned down by an investor. Up to 68% don’t have a cash flow statement on hand when they pitch, while 35% don’t prepare a business plan at all. One in 10 reported that, when it comes to a meeting with an important investor, they don’t prepare anything at all.
That’s a serious problem says Michele Romanow, serial entrepreneur, frequent angel investor, and the youngest of the stars of CBC’s Dragons’ Den. “Practice, practice, practice,” she intones, cautioning young business-starters against the idea that they can make things up on the fly.
Still, even the most studied presentation may not find favour with your audience. “There’s no such thing as a perfect pitch that every investor will say yes to,” she explains. “Every person you date doesn’t want to marry you, [and] every investor you meet isn’t going to get what you’re doing.”
The key to a good pitch is simplicity and personality. “I think a pitch should always start with who you are, why you’re doing this business, and why you’re going to win,” explains Romanow, who has heard hundreds in her two seasons in the Den, and many more as an angel investor. “Not enough entrepreneurs talk about themselves—they don’t make it personal, and personal is compelling.”
It’s also crucial to ensure investors know exactly what it is you’re offering them. “Your test should be: In your opening line, can your grandmother understand the business idea?” she says. “Reducing things to really simplistic terms that anyone can understand is so key—if you lose someone at the beginning of your pitch, it’s almost impossible to get them back later.”
Romanow cites TappLock, a fingerprint-based padlock, as a particularly good pitch from the most recent season of Dragons’ Den. “It’s a really great product, and they were so well prepared—they understood their market,” expmains Romanow, who invested in the company. Being able to prove to an investor that there’s demand for your product is key, she says, and TappLock had raised $230,000 and pre-sold 5,000 units via a crowdfunding campaign.
In the Den, success and failure often comes down to the numbers: revenue, profitability, and growth. But recalling the exact figures is less important than knowing how they all fit together. “People feel like they need to memorize every number,” she says. “What’s really important isn’t the numbers themselves, but the ratios. You need to be able to tell me that your revenue is 100, your costs are [say] 60%, and your take home is 10%.”
While it’s important to practice your presentation and plan for each appointment, obsessing about the success of a single pitch will ultimately get you nowhere. “When you start meeting with investors, it’s not about getting two meetings, it’s about getting 100,” Romanow cautions. “Only then will you make the connections you need to really get to where you need to go.”