Unless you're bootstrapping your fledgling business
, there will come a time in the life of your startup when you will need to raise funds to sustain it, which means you'll have to pitch your idea to investors and show them why they shouldn't turn you down. Easier said than done. It's said that an investor will only fund 100 of every 1,000 pitches he hears, and for every investment he makes, only 10 will be successful. So how can you ensure that your company will be one of those 10?
According to Ibrahim AlHusseini, founder and general partner at The Husseini Group and FullCycle Energy Fund, to nail pitching entrepreneurs need to follow these three golden rules:
1. Be an expert
When pitching to a potential investor, you must show them that you know your stuff: you know the ins and outs of your industry and organization, understand its mechanism and are able to predict its future direction. Be clear and informative, but not too informative, support your words with facts and figures, and unveil to investors how you plan to use their money to make your startup profitable and successful. Don't forget to present the risk and potential reward in a sincere manner too.
2. Come clean
Potential investors will want to get to know you and find out more about your business background: is this your first venture? what have you been up to in the past? what made you do this? how did your other businesses (if any) fare? No one's perfect, so don't worry if you had a stained track record, as long as it's all fixed now. Reveal your failures and show them that you've learned from them and ensure investors that you're committed and won't let your personal life interfere with your business. Investors need to trust you, so show them that you can be trusted.
3. Be realistic
No matter how awesome and full of potential your business is, don't expect things to go as planned because they rarely do. Since most businesses fail, the odds are against you from the beginning -- now it's your job to beat them. You need to prove to your potential investors that you truly understand and quantify the risks and that you are aware things can go sideways at any time. Leave the ego and arrogance aside, be realistic and recognize your competition.