17 Jan The Most Important Thing in a Pitch Meeting
Entering an investor meeting can be difficult for a new startup. There is flurry of emotions…, everything from excitement and nervousness to anxiousness and doubt. However, the most powerful feeling for entrepreneurs it is indeed stress. That state of mental strain that seem to put everything under a giant veil─and without even thinking─ we walk into our first meeting carrying a burden of unwanted thoughts that emerge from the unconscious with ease. Thoughts of unplanned self-doubt make themselves present to sabotage your chances of success. We soon find ourselves questioning everything around what we thought once to be a great idea. Common questions such as: Can I do it?; Will the product hold up?; or How can I convince the investor to buy into the company? are very common when we allow this state of mind to take over. While these feelings are common, even among the most experienced entrepreneurs, investors understand it and tend to be generally kind if you show signs of these emotions. Because what investors are looking for are not these emotions, they are looking for confidence in the entrepreneur. They want to see confidence in the product, confidence in the team, and most importantly; confidence in the financials.
noun | con·fi·dence \ˈkän-fə-dən(t)s, -ˌden(t)s\
“The feeling or belief that one can have faith in or rely on someone or something.”
Creating financial projections can be a difficult task if an entrepreneur does not take into consideration all the contributing factors. Besides historical financial data, an entrepreneur must be account for:
Direct Market Size: The market the company can capture in ‘x’ amount of years.
Marketing Materials: An estimate of the cost marketing the product and company will cost.
Taxes: An assumption of the cost of taxes in the jurisdiction of the company.
Amortization: Payments on a debt overtime. In many cases this is in relation to a loan at initial stages of the company.
Employee Cost: The cost of hiring workers, not forgetting insurance and pension cost if applicable.
Administrative Cost: Operation overhead; office space, insurance, internet, etc.
Attorney Fees: An attorney to act on behalf of the company in an event of litigation.
Growth Rate of Competitors: Considering this rate will allow the company to make predictions based on realistic data.
When all of these items are accounted for in the financial projections, an entrepreneur should be able to enter a pitch meeting with confidence, having a better understanding of the market and over cost; allowing more accurate and realistic financials projections. This realism of financials speaks to investors; it shows the entrepreneur understands what they are worth and to invest in them.