How to convince an investor to back your startup? What's missing in your pitch?

At some point, most entrepreneurs will need to go out and look for money for their business startup. Look at any pop management or business magazine or newspaper column on small business or entrepreneurship. Sooner or later you are bound to run across an article on how to craft a winning proposal to bankers, angels or VC’s. You’ve seen those headlines…10 steps to a dynamite business plan.

The problem with most of these stories, is that they are nothing more then stories.

Compare any 5 random articles, and you’ll notice no common rhyme or reason. They are all over the map. Each will have a different set of priorities and a different focus, based most often on the whim of the writer, consultant or journalist. What likely happened is that the story started out with 12-15 priorities and the editor told the writer that they only had room for 10. You have to wonder what got cut and why?

Rarely will these articles refer to any credible academic research  ie what are investors ie bankers, VC’s and angels really looking for, when they are deciding to invest their money in your company?

The following quote offers a hint on what to stress the most.

The Venture Capitalist’s Maxim

I’d rather have a Class A entrepreneur with a Class B idea

Than  a Class A idea with  a Class B entrepreneur

While most entrepreneurs will intuitively rank and stress the business plan as the  most important thing that professional investors are looking for, most VC and Angels rate it as number 6, way down the list

I’ve seen too many business proposals that largely ignore the profiles of the management team or hide it at the end of a report in the appendix, instead of trumpeting it front and center. One piece of yet unpublished academic research cites up to 30 points that a savyy VC or Angel will look for in a management team. Many of these points are often forgotten or ignored by the novice entrepreneur in their pitch to angels and VC's.

Source: Certificate program in Entrepreneurship & Innovation; University of Toronto, School of Continuing Studies, St George Campus.

© 2005-2007 

Walter Derzko -"Changing the world, one idea at a time"©

Walter Derzko teaches at the Certificate Program on Entrepreneurship and Innovation at the University of Toronto, School of Continuing Studies, which starts in the Fall of 2007

Expert, Consultant and Keynote Speaker on Emerging Smart Technologies, Innovation, Entrepreneurship, Strategic Foresight, Business Development, Lateral Creative Thinking and author of an upcoming book on the Smart Economy "

The Smart Technology Blog: The Smart Economy -- Read, enjoy, explore, speculate, comment !!

To arrange for an in house presentation or briefing on smart technology see here

To explore the opportunities and threats of any new smart technology in your industry - Contact Me or explore how we can work together

• ".....Strategy without action is a day-dream; action without strategy is a nightmare"-old Japanese proverb
• ".......Ours is the age that is proud of machines that think and suspicious of men who try to." -- H. Mumford Jones
• ".......Without changing our patterns of thought, we will not be able to solve the problems we created with our current pattern of thought."  --A. Einstein
• ".......Change is difficult, but complacency and stagnation are surefire showstoppers..." --Walter Derzko

• ".......Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."  -- Margaret Mead

• ".......Small minds discuss people; Average minds discuss events; Great minds discuss ideas; --Anon

P. S. if this is your first visit to my blog, please go to our Welcome page

Comments

[Patrick Morris]

So...um, what are the "30 points that a savyy VC or Angel will look for in a management team" cited in the acedemic research? Enquiring Minds want to know...(sic)

[Walter Derzko]

The 30 points are part of the course

[Jason Webb]

Thanks for the resource. I hadn’t heard of many of these, but forums are a valuable networking and informational tool for entrepreneurs.
Thanks and Regards/-
Jason Webb

[school_dubl]

Happy New Year! Happiness and success in 2011.

[business consulting company]

It would really help if you have a sound business plan that will ensure the long-term profitability of your business. I doubt any investors would want to throw away their money in a risky venture.