Episode 46: How NOT to Pitch Investors

Most of the time, it takes months to get a meeting with an investor.

After waiting all that time, you would think that people would come prepared, with a straight to the point, clear pitch.

Some people do, but most end up realizing they just thought they were prepared.

And at that point…

It’s too late. They have already wasted 10-15 minutes allotted for the meeting, the investor is not interested, and they find themselves back at square one.

I want to help you avoid that painful and discouraging experience.

I’m going to share some things you can do to make the most of the time you have with your potential investor, but more importantly, I’m going to share what NOT to do.

In this episode, I am going to cover:

  • How to structure your pitch and get straight to the point
  • Storytelling: When it’s appropriate and when it’s not
  • And… What a potential investor is likely to think about while listening to your pitch

In today’s episode, I’m going to cover how not to pitch investors when you’re trying to raise money for your startup.

All right. So how do you pitch investors? How do you not pitch investors? When you’re trying to get money for your startup or growing your business, or getting your business to the next level, how do you pitch?

So I just want to let you guys know that this is gonna be a brutal episode. I was in a Clubhouse room the other day, and I was super humbled to be invited to the stage with guys like Grant Cardone and, you know, Kevin Harrington and some other, you know, A, A plus players, and investors. And basically, they were pitching us on, you know, investing in their business, and some of us took deals, and some of us didn’t take deals. I got one potential deal.

And you know, then I held a room where I let people pitch me directly. And here’s the thing. I kept seeing the same thing, and I want to cover the finer points of it so that when you guys go, especially if you have to wait months to get a meeting with an investor, I want you to not make these mistakes because you’re going to get 30 seconds.

You’re going to wait three, four, five, six months. You’re going to get in front of an investor. You’re gonna start talking. They’re gonna play with their phone, roll their eyes. And then, two minutes later, you’re out the door, and that’s it. And you’re going to be devastated. And so I don’t want you to be devastated.

So here we go. The best thing you can do when you pitch an investor on your startup is here’s what I got. Here’s what I want. Here’s what you get. Okay? So let’s break that down. Here’s what I got. This is my product. This is who it serves. This is what it helps them do. This is what we have in revenue. This is how many sales we have, right? Like, don’t start talking about your personal life. Don’t start talking about your background. Don’t give a story unless that story directly illustrates the need for the product.

That’s the only exception. And that’s a great exception, but you know, sometimes we hear these stories, and we’re thinking, all right, this has to do with the product, right? Like in order for the product to make sense, we have to hear this story. And then the story won’t have anything to do with the product. You know, like if you own a t-shirt company that sells nerdy t-shirts, I don’t need a backstory. Say, I have a t-shirt company. We sell nerdy t-shirts. We did $250,000 last year, and we need 150 grand so that we can buy a new machine to produce faster and for a price or a lower cost per shirt. If you give me this 150 grand, we’ll give you 15% of the company. Boom, done.

And then if the investor wants to, is intrigued by that offer, and intrigued by the product, and intrigued by the proposition. Then the investor may ask you about you. And at that point, they will care. You got to understand, nobody cares about you before you pitch, right? Like you’re one of 6 billion people on the planet. Nobody cares. Nobody cares about you, your background, your kids, your life story. Nobody cares. Okay. Now, if you present a product or an offer that interests them, then they care a lot. Because now they want to know who’s behind that product. Who’s running the show. Who’s who is the captain of the ship, and will that captain sink the ship or keep the ship afloat. That’s when they care. So a lot of people get that backward.

And so let’s go back. Here’s what I got. Here’s what I want. Here’s what you get. Right? So here’s what I got. I got, you know, this company, these are our sales, this is what we sell. This is why people buy it. This is how we were able to sell. I want this much, right? I want this much money. Here’s what we’re going to use it for. Here’s how it’ll help grow the business. And here’s the equity percentage that we’re willing to give up, done. And then, the investor will ask follow up questions. And that’s where you get to talk about your personal life, this, that and the other thing if it’s relevant. So that’s the best possible way to pitch.

And, you know, I personally went through that as well as Kevin went through that, Grant went through that. We all went through it multiple times, along with other really smart investors. And, you know, and then I did my own room. We had Maxwell Finn on, we had Blake Noubar on, we had, you know, Tyler Jordan, we had a lot of people on, and we all said the same thing here is how you pitch. And every single time someone came up to the stage, nine times out of 10, they completely ignored the advice.

So think about this, like, from an investor’s standpoint. If I tell you, and most of the time we don’t, investors don’t tell you how to pitch, right? That’s a bonus. But imagine we tell you how to pitch, and then you completely ignore the advice, and you just do your own thing. Well, guess what? Now we’re thinking, okay, well, now if I get into business with this person, and I say, “Hey, you know, do this,” like, you know, here’s a strategy. Cause a lot of times, people are also looking for strategic partners, not just money. So again, if you want me as a strategic partner for your business, and I give you something to do, and I say, “Hey, here’s this thing.” And you don’t follow the instructions. Well, I don’t want to be a strategic partner with you.

So again, understanding and comprehending what an investor is telling you, and then just blatantly not doing it that way. I remember this one time. I said, “Don’t tell us about your personal life. You know, tell us about your product. And then if your personal life fits into that product, fine.” Right? And then the very next speaker gets up, and he’s like, “Hi, you know, I’m, so-and-so, I’m from this city. I have this sexual orientation, and I’m this race…” And blah, blah, blah. And I’m like, “What does that have to do with your product?” He says, “Oh, well, nothing. I just want you to know who I am.” I’m like, “Didn’t you just listen to what we said?”

You know, like if you sell a product where those elements of your life directly fit into the product, right? You know, then it makes sense. But if you’re just randomly telling us stuff about yourself and how much of a go-getter you are, and you know, all this stuff, it’s like, no one cares. They don’t care until they care about the product. Then they care about who is behind the product.

So the other thing is, think about one more thing. We, as an investor, we have to have faith in you, right? We have to have faith in you. And if we know that you have not done the research to at least read a book on how to pitch, well, then who’s to say like, why would you do the research and put the work in to know how to grow your company, how to grow your sales, how to manage a team. Like if you, if you get on there and you pitch, and you’re just so terrible at it, and you’re not even following a structure, well, you didn’t take five minutes to Google, how to pitch. Like you didn’t do that? Well, what makes us think that you’re going to do anything decent with the business? All right. These are things that are going through investors’ heads.

And then the final thing. And just so you guys understand, I’m not like saying that no one cares about who you are as a person or your again sexual preference, race. It’s not a social issue. It’s an issue of investors get pitched. You know, I heard Kevin say he gets 200 pitches a week. Now, when you get 200 pitches a week, you can’t care about everybody because it’s impossible. That would be all you would be doing all day.

You know, again, the reason we have friends and family because friends and family are special. We care about friends and family because they’re close to us and they’re special. So we care about them. We care about their life, their personal life, you know, and their causes. We care about that because they’re friends and family. That’s reserved for them.

But when I just met you, you’re asking me for money, and you come right out of the gate for three minutes, talking about your personal life. Before you talk about your business, I’m sitting here going, why are you talking? Like, why are you here, right? So that’s one thing.

The final thing is what your ask is. I remember this one person came on, they had a t-shirt company. I could be getting this mistaken for somebody else. So I’ll just say it in general then. I’ve had people come on and say like, Hey, we had sales of 30,000 last year, which is like nothing, right? Like 30,000 across a whole year. That’s basically nothing, or they say, I have an idea. Was it built yet? No. Do you have a waiting list or any hype for it yet? No. Do you have a prototype for it yet? No. So it’s just an idea. Yes. What do you want? Well, I want $300,000. What equity do I get? 5%. Like, no. Okay. No, no, no, no. In fact, the other thing is like this 5% to one person asked for a hundred thousand dollars for 2.5%.

Like, get outta here, go away. Like that’s not even come on, man. Like, be serious. You know, that’s a troll at that point. Guys, be serious. Somebody is going to give you their hard-earned money, putting it at extreme risk. They need to make the deal worth their while. And let me just give you some perspective before you think I’m just being too harsh.

If I have a hundred thousand dollars, right. And I have the choice between buying a blue-chip stock, writing some options calls on it and collecting basically guaranteed money, or just putting it in that stock, knowing like Apple, like knowing that company’s going to grow, no matter what. Sure, the return I get might not be amazing. Maybe it’s 5%, maybe it’s 10%, you know, it’s not amazing, but it’s pretty solid. You know, I believe in that company, I know that Tim Cook is not going to just run off and be like, I don’t want to do Apple anymore.

But when I’m in thinking about giving money to somebody who’s starting up, that that concern is there. Like you could just decide that you want to be an artist, or you want to, you know, travel the world, and you could just get rid of your business or not focus on it, right? So if I’m going to put my hard-earned money in you, I expect like a 300, 500, 1,000, 5,000 X, multiple. I mean, people that put early money into companies like early, early money into companies like Uber and Facebook and all that.

Imagine buying Bitcoin for $5. And just today, it hit 40,000; that’s a multiple. But think about this, back then, if you bought $10,000 worth of Bitcoin, at $5, you were taking an extreme risk. Everybody around you was like, that’s risky. You know, who knows if it’s even real. And then now fast forward to today, it’s really real as $40,000 a coin. And you’d be a fricking multi, multi, multi, multi, multi multi-millionaire.

So that’s the thing is, you know, angel investing is extraordinarily high risk, very high risk. And you’ve got to remember that when you’re asking an investor, you already are asking them to put their money, like nine times out of 10, an angel investment doesn’t work out or more so that we’re already assuming that we’re not going to get our money back.

And so when you say something like 5%, it’s just, it’s insulting. Well, it’s not insulting. It’s just laughable. It’s insulting in a way that it’s a waste of time. We just gave you five, 10, 15 minutes of time, which to us, which to an investor. I mean, maybe not, to me, it’s worth a lot, but to somebody like, you know, Kevin Harrington or something, I’m sure it’s even more, you know? That’s worth a lot, and we just gave you that time. And then you just came at us with, I don’t have any sales, and I want a hundred grand, and you only get 5% like that’s insulting because you’re insulting our time. You’re disrespecting our time.

And I, again, I know this sounds harsh, but I would rather tell it to you now on this podcast so that you don’t wait six months to get an interview with an investor. You come at them with that stuff. They laugh at you, kick you out of the room, and then you like develop trauma from that, because that can happen. Imagine that, that would be devastating. So I’d rather you hear this podcast right now say, Oh, well, Dan’s a jerk for saying this, but then you don’t make that mistake. And so you don’t go through that.

You know, I, that’s what I’m trying to save you from because the investing world and the business world, in general, is very brutal. It’s brutal. And it’s better to understand that before you get thrown into the lion’s den, you know? So I hope that’s helpful.

And personally, I’ve been very lucky with my angel investing. In fact, I’ve, and I’m very selective as well. I do a lot of consulting equity deals where I will not actually put any money in, but I’ll take a company that’s struggling, but making money, and I will, and this is far and few between, but I will you know, I’ll basically take half of the company, and I’ll come on and CML.

And then, and I did that with a software company. We built up, and we had a great exit. It was fantastic. And then I just recently did it with a coaching company that sells high ticket coaching. They were stagnant. I came in, redid the webinar, did all the ads, talked with the sales team, did everything there. And then right after that, they just blew up, and, you know, I acquired half of that company. And I’m sitting pretty because I put my time in, which my time is worth money. They’re happy because their sales increased far beyond what it would have if I didn’t step in, and now we’re both making money. So I do a lot of consulting for equity deals a ton because right now I’m loving other investments, I’m loving stocks and all that, and I’m getting great returns there.

So I prefer to do a lot of consulting versus equity deals. So that’s what I do, but I can cover that in another podcast episode, maybe one day. But I hope this episode has helped you learn how not to pitch investors. And I know it was a bit brutal, and I know it was a bit direct, but I’m only telling you what that investor is saying to themselves in their mind. And if they happen to be nice enough to sugar coat that and be nice, they might, but in their head, trust me, that’s what they’re feeling. I don’t want you to experience that. I want you to come in, and I want you to kill it. I want you to crush it. And the first step is knowing what not to do. Now. I recommend you go out, and you buy a book on what to do.

I mean, I did cover that as well, but the point is don’t make those mistakes. And you know, also don’t overvalue your company because, you know, if you’re asking for all this money and you’re giving up a little bit of a percentage, you’re basically valuing your company at millions and millions and millions of dollars, and it doesn’t have any revenue yet. It’s absurd. So think about that, read some books on it. But try to remember these keys, and it will help you.


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