Since many entrepreneurs need a polished pitch because they are seeking funding, last year I interviewed angel and venture capital investors about what they looked for in an elevator pitch. Here were their responses as well as advice they had for entrepreneurs looking for investors:
Jonathan Kislak, partner of Antares Capital Corporation:
Essential elements: "Make sure to tell us why you are the person who can make this work. Not enthusiasm alone, but track record, too. Why should we trust you to execute the plan? Also, don't confuse a product with a company. VCs are in the business of financing companies. Products are usually best licensed to someone already in the business who has a production and marketing presence."
Mistakes he sees: "Too much attention gets paid to the big market and not enough to exactly who will buy, why they will buy and how you will reach them to get them to buy.''
His advice: "Be realistic. Listen to the feedback you get. If you keep hearing the same thing over and over maybe you need to change your plan. Not every good idea is worthwhile pursuing."
Mike Tomás, president of Astri Group and CEO of Bioheart (and a Business Plan Challenge judge this year):
Essential elements: "Traditional elevator pitches are 30 to 60 seconds. With tenured investors, you do not have that long. Please grab my attention in the first 5 seconds; use a BDP (best demonstrated practice) comparison if you have to [ie, 'My company is the reverse eBay for bankers']. Keep it simple - but lead with the substance and get to the point. Please let me do my own math - tenured investors already think your financials are fractured. "If I'm still listening when you are done, you've got me. Make sure you have an Elevator Pitch Part II ready and on deck."
Mistakes he sees: "Overambitious projections. Launch a browser and fine-tune comps. You will not acquire 10 percent of a billion-dollar market in your first year of operations."
His advice: "Many disagree with me but I firmly believe that in the long run debt is cheaper than equity. If you believe, borrow. Pay your debt and keep your equity."
Barbara Boxer, founder of Women Angels Network:
Essential elements: "Specifics. Has the person been a successful entrepreneur before? And I need to understand how big an idea this business is and how much money it will take, what are the business milestones going to be to get more and more money."
Mistakes she sees: "How much money the entrepreneur needs and what he or she is going to use it for is often left out of pitches."
Her advice: "Have a business plan with an executive summary and financials that has been beta tested and is in its third or fourth version before seeking outside money. "I do not want to see a business idea, I want to see a business that I can invest in."
Ricardo Weisz, board member of New World Angels and founder of Northvest (and a Challenge judge this year):
Essential elements: "A well-rehearsed, fluid delivery of a pitch focused on the product [solution or service], a seasoned management team, the funding need, the pre-money valuation and what the money will be used for. I am impressed when the entrepreneur has taken the time to research me and my area of expertise."
Mistakes he sees: "Too many poorly prepared presentations and too many unrealistic expectations in terms of company valuations and timing of the investments."
His advice: "The process of obtaining outside financing [from a qualified investor] is time consuming, long and frustrating. The entrepreneur needs to research carefully for investors that have an interest and are actively [past 24 months] investing in the space of the product or service that the entrepreneur participates in. The entrepreneur needs to have realistic expectations of the effort and time required to obtain funding and not get easily discouraged. "Take every presentation as a learning experience and an opportunity to hone the presentation further."
See my earlier post here.
The top six finalists in the Community and FIU tracks of the 14th annual Miami Herald Business Plan Challenge were asked to give their elevator pitches under the bright lights of Miami Herald and FIU studios. All of them are now competing in the Challenge's People's Pick competition. Watch their videos here.
These emerging businesses in South Florida are not necessarily seeking investor money but they are seeking your vote! Please vote early and often through April 30! The winners of each track will be honored in the May 7 edition of Business Monday.