An Investor Pitch May Not Always Lead To A Term Sheet, But It Is Useful Nonetheless
Many entrepreneurs get disheartened and disappointed when they prepare an investor pitch and the investor refuses to fund them. Their single point purpose while pitching is to raise money for their startup and when they fail in this exercise, they start worrying that their startup is doomed to fail.
Founders need to step outside their skin and look at the big picture. Rejections from investors should never be taken personally, because you need to remember that the funder’s response to most pitches is going to be a ‘no!’ Capital is a scare commodity and limited in India, and even if the investor thinks your company is good, he doesn’t necessarily have the liquidity to be able to fund every good entrepreneur who comes to him. When the investor turns you down, please don’t start catastrophising. A No does not mean that your startup is not going to do well – it just means that this particular investor is not right for you at that particular point of time.
Your agenda when pitching shouldn’t be limited to only raising money. The odds of doing this successfully are stacked against you, and you will start getting frustrated and disappointed. You need to change your perspective and think of each pitch to an investor as an opportunity to learn from someone in the startup ecosystem – an outsider who can provide fresh insights which they would not be able to get on their own.
You should aim to get smarter every time you pitch to an investor. A good investor will critique your investor pitch and ask tough questions. This is a good sign, and shows that he is interested in your startup. Please don’t get defensive and learn to keep an open mind. This can be hard, but getting upset with the investor will not help you.
If he has not been able to understand what makes you special, don’t jump to the conclusion that he is dumb – often this means that you are not putting your point across properly, and need to work on refining your pitch.
While an investor may not have the deep domain expertise which you have, he does have a lot of industry expertise because he’s heard an investor pitch from other entrepreneurs in the same space as yours. He will compare you with your competitors and will also tap into his network of investors to identify your weaknesses and vulnerabilities.
You can use his feedback and criticism to incrementally improve your investor pitch, until you finally do find the investor who is right for you. You are looking for a stable marriage – not a one night stand!
[This post by Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
