So you’ve presented your idea and business plan for investors a handful of times, and you’re prepping for the next pitch. You’ve done your research, and you know quite a bit about the investors you’ll be pitching to and feel a few tweaks would help you cater your pitch to your next investor.
The natural tendency is to modify your business plan or proposal to sound more appealing to this new audience.
Stop. Take a word of advice.
Don’t fall prey to the temptation to adapt your business plan to fit investors.
I’ve worked with many entrepreneurs, and this destructive tendency does not bode well.
Before we get into the details, I want to pause here with a helpful tip: Don’t fear rejection above all else. A single “no” isn’t your be-all-end-all. Pandora’s co-founder Tim Westergren was rejected over 300 times before securing funding.
Planning your pitch in a way that attracts the right audience makes you more likely to be a magnet for the right deal. However, that great deal may take some time to materialize. This will also mean you will pitch through some “no” responses before you get to the “yes”. Be careful not to think that the perfect pitch will result in the perfect deal right away. There’s a common misconception that as long as your pitch is great, your investor will jump onboard. Your pitch may be fantastic – your investor may just not be ready yet, for reasons beyond your pitch. Being able to tell the difference is key.
How This Common Misconception Almost Cost My Client the Deal of a Lifetime
I had an amazing celebrity client that I supported in pitching his health and wellness app, and it’s actually his story that motivated me to write this post.
My client had a complex business vision and was pitching his business plan for investors to anyone who would give him an audience.
Along the way, he was changing his terms from one audience to the next. This became a problem when he offered an investor 10% of his business verbally, but the business plan included a higher equity offer for a lower investment amount; those terms were leftover from someone he pitched the previous month. The business plan also had other issues like additional revenue streams that wouldn’t apply with the current investor deal.
The bottom line was that my client ended up with several versions of his own business plan and he confused investors on more than one occasion by sending the wrong files or by saying something that was different than what the business plan showed.
Fortunately, he was one of the most charismatic entrepreneurs I’ve met, and he was finally able to smooth over the misunderstanding with one of the investors he wanted. However, for a while, he was sure he had lost the deal — and he was definitely tired of hearing rejections by that point!
The Dangers of Modifying for Each Pitch
Although a bit of tweaking is okay, be careful when headed down this slippery slope. You don’t want to lose sight of your idea in the process of over catering.
It’s perfectly alright to find out what investors care about; this way you can emphasize the part of your plan they’re most interested in. (And if you’re unsure? Just ask them candidly so you can get down to business.)
Remember, your business plan is a clearly defined explanation of your idea. Don’t modify it to fit the audience as the result could be devastating. Even if you do successfully secure funding with an enhanced idea, you’ll find yourself completely unprepared for that new access point.
A Better Alternative
The answer isn’t to change your idea. Instead, change your audience.
Resist the urge to cast as wide a net as possible and only pitch your business plan for investors to the right audience.
Aim for a smaller number of investors who seem to be well-matched to your startup.
Keys to Finding the Right Audience:
- Don’t waste your time pitching to someone who is clearly not interested in your startup type. Your energy is better directed toward someone who is a proper fit.
- Many investors will make clear their preferred sector. Find someone who accepts new ideas by asking questions like: “Do you look at external ideas?” “Would you mind if I sent you some of my ideas?”
- Do your research. Be engaging. Be personable. Just don’t lose yourself in the process.