With investors, the Rule of Three can make or break your funding. Passion. Product. Team. But there is a fourth element to that equation. Entrepreneurs tend to think pitching should embody one or even all three of those elements. But they would be wrong is they don’t understand myths that kill investor interest.
There are three myths about pitching to investors. But first, what is a myth. Here is one of the simplest definitions: Any invented story, idea, or concept.
Let’s discuss each of the three myths around pitching investors and dispel them. These myths have killed tens of thousands of deals and cost entrepreneurs millions of dollars. As a Vision Master, you must “get” why they do not work.
You may believe that the following pitching myths are true. Many people also believe that if you execute the myths well, you will make up for the fundamental weakness of your pitch. They are myths because they are not valid. But you need to know what these myths are. So you catch yourself thinking them.
#1 – The first myth is that passion will carry the day. After all, it’s my passion that will drive the business to success. Right? People believe that a lot, especially in early-stage ventures.
Passion cuts two ways. Investors appreciate passion, but without deep trust between you and your investor, they are afraid of passion.
- Passion is emotional
- It can cloud judgment
- Passion by itself is not enough
#2 – The second myth is that the technology or product alone can deliver investor results. In other words, the technology or product is so compelling that any intelligent investor will get it. But…
- Products and technology are obsolete at a rapid pace
- Competition is out there waiting
- Too much tech is boring to investors.
#3 – The third myth is that past team successes will predict the future. My track record and team history are so strong that no one will doubt our ability to make a successful company. But the past does not apply to today in the minds of most investors.
- Things change; your team is different
- You are a changed person
- The entire world is different.
Those who know me understand I am a big proponent of getting investors to bet on the jockey. You are your team are more important to the company’s success than product or tech.
We also discussed that past performance would carry the day with investors is a myth. It is important to note that “betting on the jockey” is betting on you and your team today. They are betting on the CURRENT environment and people. Today your team is different; your market is different. Hell, the whole world is different!
So those are the three myths. If you find yourself thinking of any of these three myths as a pitching strategy, you are making a classic mistake.
So the fundamental flaw of the myths is that you think Investors are listening and trusting. That they’re listening with an open mind. They are NOT. They are listening for the flaw in you, your team, your product, and your pitch. You MUST earn their trust to move forward. Passion + Product + Team + TRUST = Funding.
You may already be paying the price and frustration of executing these myths. Think of the wasted time and meetings that you can never have again.
Pitching myths are real because a lack of trust creates fear in the investor’s mind. In the presence of trust, passion is a virtue; investors believe your product and tech will succeed. Because of trust, you and your team will overcome competition and market changes.
Don’t laugh this off. You must address trust and fear in the investor’s mind at the start of your pitch or they are not listening to your pitch.
I am not suggesting to my Vision Master audience that you don’t talk about the product, passion, or people. It means that you talk about them after you establish trust.