Tim Freriks
New Contributor
When entrepreneurs try to raise money at any level, it involves a “pitch”. Pitching to investors can be defined within the context of a sales process where you and your idea is the product and the investor is the customer. There are some rules, but first,don’t pitch until you are ready. [REMOVED]
Before the pitch, entrepreneurs have to understand the investor’s mindset, what they are looking for. Investors want a place to put money that has the potential for maximum return with as minimum of risk as possible. They don’t normally want to “take a flyer” on an unproven concept. Therefore, you have to prepared with as strong a “proof of concept” as you can. There are three flavors of proof of concept: technical (does it work; does it give the customer the value proposition it promises); economic (is the price customers will pay be more than a summation of the costs involved in producing and selling and distributing it).
The third is “social” proof of concept where you have proven that there are lots of people with a) a real problem (the one you think they have), b) an urgent need to solve it, and c) a motivation to buy your product as a compelling solution. Only after you have the full proof of concept should you pitch to a group of professional investors. Friends and family need less proof, but they still will have the same fundamental concerns: can it make money?
Comments?
Before the pitch, entrepreneurs have to understand the investor’s mindset, what they are looking for. Investors want a place to put money that has the potential for maximum return with as minimum of risk as possible. They don’t normally want to “take a flyer” on an unproven concept. Therefore, you have to prepared with as strong a “proof of concept” as you can. There are three flavors of proof of concept: technical (does it work; does it give the customer the value proposition it promises); economic (is the price customers will pay be more than a summation of the costs involved in producing and selling and distributing it).
The third is “social” proof of concept where you have proven that there are lots of people with a) a real problem (the one you think they have), b) an urgent need to solve it, and c) a motivation to buy your product as a compelling solution. Only after you have the full proof of concept should you pitch to a group of professional investors. Friends and family need less proof, but they still will have the same fundamental concerns: can it make money?
Comments?
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