Pitching to Family Offices, customers and vendors can scare even the most confident of entrepreneurs. It can be a petrifying experience talking about your passion project in front of people that may not be as enthused as you are. So when presentations arise, panic ensues.
Here are nine pitching no-no’s:
1. Committing without a plan. What I have seen over and over again is a CEO or founder talking about projections without having a real plan. For example an entrepreneur will claim they’re going to hit a certain customer number, ship X new products or do X new bookings in a certain period of time.
Why does this bother me? Because it’s a really difficult way to start a relationship. If any or all of those claims don’t play out, I’ve got to wonder why the CEO was so confident it would happen.
Your projections don’t have to be exact (odds are, you’ll build a model and the only thing that is guaranteed is that it will be wrong), but before you announce near-term objectives you should have a better idea of not just where you’ll land but how you plan to get there.
2. Lying or exaggerating financials. This is a crystal clear issue, but it happens more often than you might think. While it might be the case that the presenter just doesn’t understand the nuances of financials — bookings vs. revenue, Annual Contract Value bookings vs. Total Contract Value bookings, net income vs. cash flow, to name a few — it becomes a bigger issue if founders are knowingly providing false information. So I’ll ask a lot of questions, because I want a clear understanding on what the numbers I’m seeing really mean and to make sure we’re on the same page.
Your best tactic is to be upfront, straightforward and clear — and if you don’t know the answer, go find someone who does and figure it out.
3. Forecasting unprecedented growth without supporting evidence. Say a company in the past has grown at 50 to 60 percent per year but during the pitch meeting, they tell me that this year, they’ll grow 200 percent year-over-year. That’s quite a jump. It’s not entirely impossible, but it does raise some red flags and will need to be dug into accordingly.
If you’re going to make a claim like that, you’d better have some pretty solid proof points to convince me that’s likely to happen. Otherwise, that’s one tough claim to make.
4. Stating you don’t have any competitors. When someone tells me they are the only game in town, they are either really arrogant or very naïve.
All companies have competitors and founders better know who they are. Entrepreneurs are competing with someone for wallet share, a product is displacing an existing product, there are overlapping components or prospects are trying to build it themselves. There’s at least one other company whose market you’re biting into in one way or another — and chances are it’s far more.
Either the entrepreneur I’m asking truly believes there’s no competition, or the individual is demonstrating a major blind spot. Neither of those things are good. Because when the competition is on the war path, that entrepreneur better know how to beat them or they are going to get run over.
5. Claiming there aren’t gaps or blind spots on your management team. Don’t be blind to the potential weaknesses of your organizational structural and capabilities of your people. Part of growing as a company often means upgrading your team. So if a potential investor asks how a team needs to change, a fair response might be: Our sales leader has been good until now but we’ll need to upgrade in the next year to eighteen months. This demonstrates that you can take the long view (and make the hard decisions) with regards to talent.
6. Focusing only on the positives. If I think everything is perfect with a company, what do they need me for? Why not just do a debt round, where there’s no dilution and no help? If we’re actually having a pitch meeting, tell me what you want in a Family Office and how a Family Office can help your business today and in the future.
7. Dwelling on issues. Every business is bound to experience problems at some point but while I prefer those issues be acknowledged, I also don’t want them dwelled upon. Problems provide opportunities to demonstrate how you have dealt with similar issues historically or plan on dealing with them today. Investors want to see that you’re up to the task of fixing things.
8. Reading your slides. If you’re just going to read verbatim off your slides, why are we having a meeting? You can just send them to me, I can review them on my own and provide feedback following that — no need to meet. Remember: slides are prompts, support and guides. Use them as such.
9. Caring just about money. Telling me that all you care about is money and valuation sends the wrong signal. (Even if that really is what you’re primarily concerned about.) Just finesse this one. Keep in mind, getting Family Office-backed isn’t a one-time transaction. Often, it involves a seat on your board. In other words, it’s a long-term partnership. For most investors, openly approaching it that way will make them much more receptive. Tell them what you want in a partner, and your evaluation criteria for selecting one.