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Break it down – Why this Entrepreneur is Clueless in her quest for Investor Capital

March 31st, 2011 · No Comments

First off, I want to offer up the positives.

She is bold and confident.   She is well spoken.  She is fearless in the face of ridicule.  Or maybe, she is just yanking every one’s chain in the room and when she went home to eat her “herbal brownies” or have a shroom omelet with free range eggs, laughed all afternoon.

See more funny videos and TBT at Todays Big Thing.
But for the real entrepreneurs out there, I’m a firm believer you can learn from everyone so let’s break it down:
Presentation: As much as we all sometimes hate doing the stale ol’ PowerPoint, it is a tool to use to be taken seriously.  If you want to be edgy, then create a template that looks like torn paper and use a funky text…. but it must be legible.   Particularly if you are going to ask for any significant amount of money… the professional factor goes up in relation to the amount of money you are asking for.  Save the handwritten pitch for the napkin on the table.   On a positive note, she did use the charts as a reinforcement for her message, not the message itself.  Graphics were used in support of the overall concept to give visual reinforcement.
Concept/Big Idea: It is great to think big, but please be able to back your idea up with some science or technology or logic.   She has logic, but just a bit skewed.  Energy in the air?  Isn’t that “The Secret”?  And air from other places that people buy so they can have the energy from that place?  I think you could sell that on late night TV but you don’t need $500K for that. On a positive note… now, the application to Tag where you have been and liked the air sounds like a great mobile app for a phone–community of all the people that liked or hated the air somewhere.  Someone develop that and charge a buck a download, donate 10 cents so she can go somewhere where the air is fresh and the energy is strong.
Asking for the Money: Not sure what to say here… Think she just plucked a # from the sky.  When thinking about the money you need, please take time to think through and PLAN what is the real cash # you need to get to prototype stage, and then to cash flow.   If that number is over $500K, and you have never launched a successful business before or you don’t have a sugar daddy, you need to break it down in baby steps.  Get the first $50K to get the idea validated and vetted and prototype or at least computer imaging/flash of what the final product would be.  Then go with next round to fully develop, and then next round to get to cash flow.   If it is too much too soon, you’ll just not get any of it.   No investor wants their $50K to go into a black hole because you make them believe you need a full $500K to make it happen.  They’ll sit on the fence until you have raised $400K so they can be the last money in.   Hence the challenge of corralling interested investors to all jump in when none want to be the first.
Summary: An entrepreneur needs to be true to themselves and “Be themselves” when they pitch and this girl definitely does that.  That can be in the format of the pitch, your attire, and the delivery.  But when it comes to communicating the opportunity, you need to take time to imagine sitting in the investor’s seat and thinking about all the deals they are looking at and how you stack up.  Do you answer the fundamental questions that an investor wants answered when they listen for 10 min  trying to decide if they should spend any more time with you:
1.  Is the idea/product viable?  Can it be created, has it been created and works?
2.  Who would buy it and why?  And how many of them are there in the world or your target market?
3.  To that end, how are you going to inform them of it so they know it is available?
4.  What do you have to charge to make money on it and what is your target customer willing to pay?
5.  How much do you need, and what are you going to do with it to reach the goal of making money?  And therefore, how do I, the investor, make my money back?
This girl, as do many entrepreneurs, focused on the excitement of the idea, without any of the meat to back it up.   She explained her logic of coming up with the idea, why she thought it would be good to have it available, but nothing about who else would think it was and any of the elements that make up a company being in the marketplace making money.
If you get glazed looks during your presentations, you could be making some of these same mistakes.   Get some advice and counsel so you don’t blow your chances with investors before you even know it.   We work with entrepreneurs and investors every day.  But, if not from us,  find an experienced professional that works with entrepreneurs and is / has been an investor so knows what they are really looking for.
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