Your plight is all too familiar... You finish your presentation with a huge smile; you know you've nailed it. You relish the opportunity to answer questions. Question time ends and you wait with baited breath for the next steps. "Thank you for coming in today. Right now, this is not an opportunity we are interested in investing in, however, please keep us updated and this may be something we'd like to look at again in 6-12 months."
That leaves you thinking - not an opportunity they'd be interested in investing in?? Then why did they ask me in? They clearly don't get it. I wasted all this time and effort to prepare and be here and they obviously had no intention of investing in the first place. What sort of investors are they anyway?
The answer to your question is not a matter of right or wrong, rather, it's a matter of perspective. You see, you've been approaching investment from an entrepreneur’s perspective, rather than from an investor’s perspective. Let me shed some light.
First things first. The way you present your venture and products to investors is different to how you talk to potential customers. They are different target audiences. They speak a different language and what is of value to them is different. Potential customers are interested in how you make their life easier and happier whereas investors are interested in your risk profile, asset value and evidence of your future likely potential.
Five minutes can easily be burned explaining your product the same way you'd make a sales presentation to potential customers. Features, benefits, technical specifications. This scenario is known as inventors' syndrome. Investors are not interested. It's not relevant and not helpful in determining whether you have an investable venture. During your entire presentation, limit talk on your product to fifteen seconds. Tell investors WHAT it is in a sentence. Do not EXPLAIN what it is.
When you shift away from a product-focused presentation and instead share an opportunity you recommend they explore, you then start to get investors' attention. Shifting perspective from a product to an opportunity can be challenging and confronting which is precisely why I designed and built the Opportunity Statement Generator. It's a tool that asks questions requiring one or two word answers and automatically pulls your answers together to form a statement of your opportunity. You can have a play with it here and start using it next time you speak to investors.
When I coach entrepreneurs for pitching, we practice answers being one or two words only. You see, what happens is an entrepreneur usually spends valuable time EXPLAINING. Five minutes of question time is ample to answer what investors need and want to know about the investability of yourself and your venture. When you spend time explaining, all of a sudden your five minutes is up, their questions are unanswered - and you took away the opportunity to showcase your value. Stop explaining. Yes, full stop, is an adequate response. $210,000, full stop, is an adequate response. If investors want to know more they will ask.
Also, it appears you were expecting your presentation to lead to a transaction. I realise Dragon's Den and pitching competitions give the impression entrepreneurs pitch and get funded, however, pitch entertainment is entertainment and not how early stage investment works in reality. Pitching introduces you to an audience of investors and if you have landed on their watch list then the objective of the pitch has been achieved. What you were expecting was to go on a first date and in ten minutes have a fiancé. Early stage investors invest their own, hard-earned money. Early stage investment is the highest risk form of investment and regardless how strong your opportunity appears at surface level, they then need to evaluate the opportunity. They also invest in entrepreneurs they have developed a relationship with. Developing a relationship takes time and we explore this in detail in our one day group coaching session Understand investors. Get Funded.
From an investor’s perspective, I congratulate you on a great pitch! You clearly got their attention and interest and have landed yourself on their watch list. You have demonstrated your capacity to learn, your courage to do what it takes to grow and now is the time to reflect on their feedback, implement what's needed and keep them updated on your progress.