Pitching investors? Blow them away with honesty.

When pitching investors, unscripted brutal honesty is the most effective. Open yourself up and show them who you are, and if they believe in you, they will invest.

One thing I have learned over the last year is that raising capital is just as much about seeking out the right investors as it is about finding cash. When speaking with a potential investor it is important to understand the psychology of the person you are trying to convince. Put yourself in their shoes, and think about how you would want to feel walking away from that meeting. Excited? Confident? Or… doubtful.

Nobody knows your business like you do. You know what could take your idea to the next level, and you know what could cause the demise of your business tomorrow. Tell potential investors both sides of the story. While it may be tempting to only focus on the huge potential that your business has in order to generate excitement, it is equally essential to talk about the weaknesses of the business in order to generate confidence. This might sound counter intuitive, but this shows potential investors that you really know your business, you have thought it through and that you are either prepared, or are preparing for potential threats.

In a previous post I talked about how frustrating the experience of raising capital has been and that is mostly because when you are so passionate about the business you have created, the last thing you want is to not have enough time to focus on running the business because you are pitching the idea to so many potential investors. But looking back, I like the fact that I feel confident about the investors that have come on board. The honest approach has weeded out those investors that either don’t really believe in what we are doing or aren’t prepared to accept the risk versus the potential reward that lay ahead. Those that have come on board understand the business, see the potential and have accepted the risks, and these are the people that I want on my side. Most importantly, they understand me and the way I think.

Some of the investors we have participating in our current round of fundraising have said “I don’t really know that much about your business, but I like you and I believe in you.” More than one has described me as ‘scrappy’. Not sure how to take that… but I think they have recognized that while I may not have a degree in Economics, nor any previous experience building a successful start-up, our company has been able to generate close to $2 Million in our fifth year of business without ever raising any capital or writing a single business plan. Our formula is simple. We recognize an opportunity, drop a line in the water, and if we feel the fish are biting, we start building a net. We then strive to provide a superior product than anything else in the market and back that up with service that goes above and beyond what anyone would ever expect. This has worked for us and when I tell my story to potential investors it is important that they believe that the business will continue to grow.

Apparently is it #SharkTankWeek, so hopefully this post will help someone in their endeavors to find the right investors for their business. Good luck!