Five Ways to Turn an Investor Off

An Entrepreneur’s first pitch to an Investor is very similar to a first date…with a person who makes more money, may be out of your league, and has plans with someone else in an hour. A smart entrepreneur capitalizes on this opportunity, so that by the end of the “date” the Investor is not only intrigued, but excited, and making plans to meet up again. But how does an Entrepreneur keep an Investor interested? Even with a strong product and management team, success is no guarantee. To help your chances, avoid these Investor turn-offs:

1. Explaining every minute detail of your technology. It is natural to be excited about your product; however, Investors do not need verbose explanations. You risk losing their interest if you venture too far beyond the basics.
2. Making hockey stick projections. By overvaluing your company, you appear to be too optimistic or even worse—manipulative. Calculate cash flows, revenues, and assets realistically.
3. Having a weak competitive advantage. You don’t need to be first to market; however, you need to be able to voice why consumers are going to buy your product over an existing competitor’s. There is strength in innovating within an already established niche, but don’t expect Investors to understand your advantage without being explicitly told.
4. Having no personal resources invested. Investors need to see that you believe in your product enough to risk your own capital for it. If you won’t invest in yourself, why should someone else?
5. Providing a vague exit strategy. Investors want to know how they will make money; simply mentioning that you will go public or be acquired is not enough.

There are many other things you shouldn’t say or do in a pitch to Investors. Tap into your network, and do practice pitches for peers and mentors. Investors follow through with about 1 out of 100 startups, so try to get as much exposure to them as possible. Join IdeaCrossing.org to connect with accredited Investors who are looking to fund businesses like yours. Use every resource available to you, and when your opportunity comes, be ready to pitch like your business depends on it.

Tiffan Clark is the Vice President of IdeaCrossing, a free online community created by JumpStart, which connects entrepreneurs with the capital, mentors and technical resources necessary to grow their businesses. Tiffan has worked at several venture-backed startup technology companies and strategic marketing agencies in both Boston and Cleveland.