There is often a mismatch between how startup founders think they’ve communicated and how they actually communicate with prospective investors. Startup founders often either shoot through a rehearsed presentation at lightning speed (so fast that an intercepted question derails their train of thought) or they are so unprepared that they spend way too much time on their introduction, trying to convince the investor of the problem in the first place. This means that the founder fails to get to the real nuts and bolts of why their solution is so important in solving a billion dollar problem. In either case the founder risks losing the interest of the investor.
You will have heard it said: a good first impression only happens once.
For a founder, preparation is paramount. It can be nerve-racking to pitch your business to anyone, let alone a potential investor. Preparation (not rehearsing) will allow you to speak with confidence and interact in a meaningful way with your investor. And be prepared for questions: when an investor asks questions that’s a good sign. It means he or she is engaging with you. How you answer is critical. Make sure you listen to the whole of the question from the investor. Don’t just answer the first thing that comes to mind because you think you know what he or she meant to ask. An investor who asks questions is trying to engage with you to better understand where you fit in his or her mind, and the relevance your startup might have in his or her network. Not listening properly and failing to answer the question directly, will cause you to lose the interest of your potential investor.
Every investor wants to know these four things in the shortest amount of time possible:
- What problem are you addressing?
- What is your solution and what is unique about it?
- Who are you and why are you or your team best suited to solve this problem?
- What’s your traction like in the market?
You should be able to answer these four questions in under 2 minutes. Being concise and having clear thoughts does not happen by accident. It takes preparation, and lots of it.