Pitching for Money: Fatal Flaw #3

If you’re going to an investor with your hand out, you don’t want to make ANY mistakes.

To make sure your pitch to an investor does not fail, avoid the fatal flaws. In previous posts, I covered fatal flaw #1 and fatal flaw #2.

Fatal flaw number three is – not answering the questions.

Teenage kids do this to you. You ask them something and you get excuses about the late night, why they want to stay out, why they want to go away, blah, blah, blah.

And your question had nothing to do with any of this. They weren’t listening. They are just concerned about their own problems.

You may think: “But we’re mature adults with years of discipline in business meetings. We wouldn’t do that.”

Sure. You’d be surprised how many entrepreneurs do a wonderful job of the presentation just to blow it during question time. They fall into the same trap as the teenagers by focusing on themselves – and not the investor asking the question.

As you can imagine there is a bit of tension during questions. And it’s easy to misinterpret the question. In fact, it is very easy to misinterpret the question.

There are two basic problems:

• Not listening very carefully to exactly what is being asked.
• Answering with the explanation before the short concise answer.

Listening carefully

To really hear the question, you need to pay 100% attention to the investor. Don’t anticipate the question. Look for the hidden agenda. Repeat the question back if necessary. Ask “does that answer your question?”.

Provide the answer before the explanation

Because we are so keen to explain the reasons for particular actions, we get caught up on the explanation before giving the answer.

For example:

• Question: What is the best market segment?
• Answer: Well, we looked at the whole industry and after about six months market research we found that we have a number of opportunities, blah, blah, blah endlessly (investor has stopped listening).

Wrong. Let’s roll it again…

• Question: What is the best market segment?
• Answer: Our most profitable segment is companies with national networks that employ between 2000 to 20,000 staff. We looked at the whole industry etc…

This is better, because right up front you’ve provided the succinct answer followed by a reasonably short explanation. Avoid the temptation to give lengthy explanations. Keep question time short and sharp. If the investors want more information, they’ll ask.

You’ll need to think on your feet here. Assess the level of detail that each person seems to need and answer accordingly. Read their body language. If they look impatient then you are probably taking too long to answer questions.

You need to nail their key worries during question time. This is a test and you want to use the Q&A to build their confidence in your team to make money in your segment with your technology.

To read more Gail Geronimos blogs, click here.