Be Up Front with Investors

When pitching your product to investors, know that they are looking for founders they can trust. They will be on the alert for any inconsistencies in your story.

Owning up to a mistake or exposing the truth of a setback can work in your favor.

I was asked to review a pitch presentation for an entrepreneur we’ll call “Jenny.”

About 5 years ago, Jenny invented a handy kitchen appliance with several features that could fit into a small drawer. It sold quite well, but after about two years sales stopped, and now she was eager to revive it and put it back on the market.

Her pitch was humorous, energetic and full of conviction. Her product was innovative, her projections were solid and her demo was slick.

During the Q&A section, I was curious as to why sales stopped after three successful years and what made her pick it up again?  She fidgeted and fumbled along with an answer that didn’t make sense about a vendor issue, unreliable partners etc. It sounded fishy. When I pressed her for more details as an investor might, the room became very quiet…

Jenny broke down and confessed that when her product was starting to take off, she developed a spending addiction that ended a relationship with her business partner. When Jenny’s problem was discovered, her partner quit and seized the remaining assets. Sales came to an abrupt halt. The gap in time, she explained, was due to two plus years of rehabilitation. She blamed the addiction on growing up poor and wanting, at long last, to have nice things.

I suggested that this question will undoubtedly come up in her future pitches. Being up front about the gap in time could make her pitch more compelling, especially if she dwells more on what she learned about herself and how it will make her a more responsible founder.

Moral of the story: Don’t lie to investors or potential buyers. Don’t hide or make up facts. You’ll be found out sooner or later.

Build a story that is inspiriting and truthful. Contact me at Rebecca@MindfulCommunication.com