Longtime Shark Tank watchers will remember the pitch for the Ionic Ear, a surgically implanted Bluetooth device. When Barbara Corcoran declined to invest, she described it as “the weirdest damn thing I ever heard."
Entrepreneurs pitching to investors at any stage of the business can benefit from studying Shark Tank pitches like that one to discover what investors respond to. Even the title characters of the Netflix series Grace and Frankie studied past Shark Tank episodes so they'd nail it during their crossover appearance for the Rise Up toilet.
Whether you're lucky enough to get a Shark Tank audience or are using a video call to convince a single investor, make sure your presentation is pitch perfect. Here are five tips from the pros.
1. Research the investor
Your approach should vary according to the potential investor's track record and history. “You're dealing with an individual who has their own internal motivation and set of criteria for evaluating your business," says Alex Azoury, founder and CEO of Home Grounds.
His experience pitching investors taught him that it's important to know not only the individual's past investments, but also their interests, education, and affiliations. “Knowing this and more gives you the opportunity to tailor your pitch to match their business philosophy and personal style," he adds.
2. Show that the concept has traction
A solid concept in theory isn't enough. Investors want to see an early track record.
“Focus on minimum viable traction, not minimum viable product," says Kal Deutsch, co-founder of Silicon Valley in Your Pocket, a virtual accelerator program. Today's investors are looking for external validation that extends beyond revenue to include collaborations, active pilots with established companies, patents, and agreements that include letters of intent.
3. Tell a story
While facts and figures are an important part of the pitch, so is storytelling. People remember stories up to 22 times more than facts alone, but they must be memorable to make a difference.
“Not only does being memorable matter to get people interested in helping you, it also helps them tell your story to others who might be helpful, so it creates a ripple effect," says Debi Kleiman, author of First Pitch: Winning Money, Mentors, and More for Your Startup, and executive director of the Arthur M. Blank Center for Entrepreneurship at Babson College.
Storytelling also places people in listening mode, while sharing data and dry information shifts them into an evaluation mindset where they judge the idea and look for flaws, she adds.
4. Create two versions of the pitch deck
Design one deck for the live pitch and a second as a leave-behind. Use a minimalist approach with the live deck so that investors focus their attention on you, not the slides. Add more text that replaces some of your live commentary in the pass-along version.
For both, include what Kate Brodock refers to as the “money slides." Brodock, CEO of Women 2.0 and founding partner of the W Fund, recommends identifying three to four key metrics or pieces of traction that will make investors see how much they could make if they invest.
“These could be anything from a really attractive addressable market to impressive user growth to margins," she says. In addition to hitting these important details verbally, give them graphic emphasis in the deck so they pop on screen.
5. Include an investor exit strategy
“One of the most common presentation mistakes is to not articulate a return on investment for investors," Deutsch says. “Show a clear path to revenue and income growth."
Since investors typically get their returns upon exit, it's important to document how you expect that to happen. “Start with the end in mind. Are you looking to sell to a larger company in your space, are you wanting to license, or are you targeting an initial public offering?" says Adam Gordon, co-founder of startup PTO Genius.
Finally, make sure your passion shines through. “Talk about your bold ideas in a way that makes people's eyes widen and their pulse quicken," Kleiman says. "Investors want to see that you have that 'it' factor or inspiring vision to get people to follow you into battle."
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