Things NOT to Do When Presenting to Potential Investors

I have coached a number of entrepreneurs during my time at JumpStart and TechLift, and presented to a number of investors while raising venture capital for my company during the worst venture funding climate ever (yes, much worse than today!). From those experiences, it has become apparent to me what most investors do and don't want to see in the presentation about a potential investment. Although some companies hit the mark (and probably attract funding), it often amazes me how many entrepreneurs miss the opportunity to tell their story in a way that will get an investor interested. Although there are a lot of "dos" in making your presentation, at the risk of being negative, here are some of the top mistakes that I have seen entrepreneurs make (or have made myself) and how to avoid them: Going into excruciating detail on the technology - Investors do want to know about your technology. They don't however, want to do so at the molecular level, or hear about the technology for two thirds of your presentation. Although most VCs are technically competent, they don't often have a physics or engineering background. You should find a way to describe your technology, products and benefits in a "Discovery Channel" format - simple, clear, yet accurate and truly descriptive in a concise way. Nearly every technology can be described this way; it just takes work and taking a fresh look.  Failing to tell them how you make money - Otherwise known as your business model, investors need to know how the business makes money, how you get to market and how you entice customers to come your way. Software and internet companies often struggle with this. If you have a SAAS model, are depending on internet advertising, are planning to sell direct, or use distribution - tell them! If the particular model you are using gives you a unique advantage- tell them. Even if your model brings some difficult challenges, talk about them. If the investor feels the need to ask you "How do you make money?", things are already going badly. Giving detailed five year financials - Do entrepreneurs really think that investors believe their projections for travel costs in the year 2011? Not only do they not believe that, they are heavily discounting your revenue forecast! Investors want to know the high level financials - your projected revenue, your projected gross margin, how much cash you need to develop the business. Leave the detailed, unreadable spreadsheets out - there will be plenty of time for them in due diligence or later.  Not bragging - Investors generally feel that the management team is the most important factor in a venture investment. Despite this, many entrepreneurs are reluctant to tell them why they are the best people possible to bring their great idea to fruition. I once coached an entrepreneur who had an MBA from a top ten school, and didn't want to include it in his presentation, because he thought it would be pretentious! Tell investors about your educational background, your market experience and definitely your entrepreneurial background. You are the only person who can possibly brag about your accomplishments, abilities and potential - don't be shy about doing it!  Not describing the "special sauce" - If an investor says "good idea, creative, but easily copied", the deal is gone. You need to convince an investor that your approach is unique, or that your advantage is sustainable over the long term. They would like to know how you can protect their investment with patents or trade secrets. If it is easily copied, they want to know how you can "run faster" than the competition, based on savvy, unique capabilities or other factors. If it is "me too", venture investors aren't interested.  Failing to create the "Oh wow!" moment - If you can get an investor to say to himself or herself "Wow - if they can do that, this is significant" or "I LOVE this idea", you are well on your way toward a potential investment. You have to create a story that does this for the investor. Paint the picture of the problem you solve, how your product solves it better than any other alternative, and how the revenue potential is huge.  Avoiding these mistakes won't guarantee you an investment, but making one or more of them will certainly prevent you from getting an investment. Don't make the same mistakes I and many other entrepreneurs have made. Learn from the mistakes of others - and make that killer investor pitch! Chris Mather is President, JumpStart Entrepreneurs-in-Residence. Previously, he managed a number of technology initiatives in Northeast Ohio for NorTech. Before entering the economic development world, Chris ran a number of technology companies in Northeast Ohio and New England, including Ion Optics Inc., where he raised $6.7 million in venture capital, and Apsco Inc. and Gould Instrument Systems. Prior to that, he spent 13 years in sales, marketing and management roles with Hewlett Packard after graduating from Worcester Polytechnic Institute with a BS in Electrical Engineering.