Between judging for Startup Weekend, the Innovation Fund North Carolina, UltraLight Startups Future Energy and the Charlotte Venture Challenge I’ve heard over 50 pitches last year including those at the Charlotte Angel Fund. Based on actual mistakes I heard in these pitches, here are 6 key questions where you don’t want to be flat-footed:
- Have you talked to any customers? Now imagine yourself in New York City, standing in front of a crowded room, addressing a panel of investors including GE Global Research, Clearpoint Ventures and Shell International and you get this question. You do not want to say “No”. You can hedge that you’ve thought about who some customers might be and that you will be talking to them very soon, but clearly that’s not soon enough. Your credibility just went down the tubes. NEXT!
- Who are your competitors? I love it when entrepreneurs tell an audience that they have no competitors. Water competes with Coca-Cola. Cash competes with credit cards. If you think you have no one else on the field, you better watch your back. Likely you are not looking at your market broadly enough, or in terms of needs versus solutions. While you are identifying who is truly taking up your market share, also get ready to explain how you are different and why others in the market have failed to address your customers’ needs.
- How do you make money? If you aren’t generating revenue yet, be ready to explain who is going to pay for your solution and why you believe they will.
- Who else is on your team? This is no time to be a hero, steadfastly fighting alone in your mission. If you can’t find anyone else to join you, or you haven’t asked, or everyone has said No, then it’s time to figure out if it’s you or the idea that has left them cold. Having a strong team is critical to early stage investors, so round out your skills with partners, a virtual team and advisors. Which leads us to the next question –
- Who are your Advisors? Strong advisors can add a lot to the credibility, expertise and access of your startup. Attracting advisors is the first test of your vision, leadership and selling skills. Identify your dream team and make a plan to meet and recruit them. Then motivate them to engage and stick with you by offering a small amount of equity.
- How much have you personally invested in the company? This question was particularly important to the folks at Innovation Fund NC, because it shows a tangible level of commitment to your business. Our local angel fund lost interest quickly in a founder who had no plans to leave his day job for 18 months. Investors want to see true skin in the game with both time and money. It’s got to hurt a little before an outsider will jump in to share in your risk.