On the TEN network’s ‘Shark Tank’, aspiring entrepreneurs must convince one of the panel of multi-millionaire investors that their idea is original and the product worth pursuing… but it takes more than passion to hook a Shark.
Although the staging and TV lighting give it a slightly unreal edge, the actual process is surprisingly true to life, and every entrepreneur stands to learn some important lessons.
Here are eight key points that can be taken from the show by every start-up founder looking for investors in the real world.
1. You will be judged first as a person, then by your idea.
If you’ve watched the show, I’m sure you remember entrepreneurs who appeared doomed by their presence, almost before they started. Others with the right confidence and personality were able to garner funding, despite a weak business plan. Investors invest in people, more than ideas.
2. Grab investor attention in the first couple of minutes.
Skip the background story and customer pitch, which every investor has heard all too often. Investors want to hear a quantified problem, a simple solution description, opportunity size, competition, traction, team qualifications, how much money you need, and what equity you are willing to give.
3. Personalise your presentation, if possible, for every investor.
Smart Shark Tank presenters have done their homework on each investor, and customise their sample product or anecdote for each. In a more general sense, find out as much as you can about every group and person you address, and tune your pitch ahead of time to match.
4. There is no substitute for knowing your business.
We have all seen the entrepreneur who believes that passion and emotion will overcome all investor objections and requests for answers. The most common failures on the show, and in real life, are people who don’t know their margins, cost of customer acquisition, channels, or other key data.
5. Dress to impress and be credible to investors.
A colourful costume may catch TV viewer attention, but may hurt your image and turn off investors. Remember that most business investors are from an era where sandals and frayed jeans were not associated with hard work and business success. Exceed the expectations of the investor.
6. Keep calm, and never get defensive when questioned.
Entrepreneurs who interrupt investor questions, or show a temper, will quickly lose investor respect, and likely lose the deal. Be sure to pose your counterpoints as clarifications rather than disagreements. Agree to evaluate investor views on subjective issues, rather than just dismissing them.
7. The value of an investor goes far beyond cash. Many entrepreneurs feel that investor money is all green, and thus the same. On Shark Tank, you can easily see that some people gain from Janine and John, while others need Steve and his internet connections. Investor knowledge and experience routinely have more value than the money.
8. The initial outcome is the beginning, not the end.
All handshakes in investor forums, or on the show, are subject to follow-on due diligence reviews. According to media reports, the investors on Shark Tank close as little as one-third of the deals you see them make on the show. On the other hand, many who don’t get an initial deal win later through good visibility and connections. Based on experience, both of these are also true in real life.
In conclusion While the forums and investors are different in the real world, there are many relevant lessons than an astute entrepreneur should take away from Shark Tank. So if you plan to face any forum of potential investors in the near term, position and practice your own pitch with advisors until you are ready to calmly face the bright lights. The last thing you want to hear from any of them is “I’m out!”.
Source: blog.startupprofessionals.com