If you’re not watching Shark Tank, you need to start immediately. Aside from being very entertaining, every episode is filled with real-life pitching lessons. Some episodes, you’ll see an entrepreneur’s life change due to an incredible pitch. Others, you’ll take notes on exactly what not to do. Both are extremely valuable, and we’ve made a list on some of the lessons you can look for.
1. Be Prepared For Tough Questions
Investors are not going to just hand you money, no matter how good your idea is. Even if they
like your business or product, they need to make sure it (and you) holds up under scrutiny. Try to embrace this as an opportunity! If you come in prepared factually and emotionally, you’ll have a chance to prove yourself as someone trustworthy enough to invest a potentially large sum in. If you buckle under that pressure, the investors may not see you as someone to trust in, even if they like your idea.
2. Don’t Oversell
Pitching to investors is anxiety inducing. These people hold the keys to success, and now you have to stand in front of them and convince them to give you those keys. It’s easy to become desperate in your sales pitch, but you have to avoid this at all costs. The investors know that you will not be there to convince every potential customer, so if your product cannot sell itself, it has no hope. Your role is to provide data, strategy, and to prove yourself a worthy candidate.
3. Investors Invest In People They Like
An investor deciding to invest in your product is an investor agreeing to work with you. If you walk into the pitch sweating bullets or acting arrogant to compensate for insecurity, the odds that an investor will have enthusiasm about spending time with you is next to zero. It’s important to remember that while these are important people, they are still people. They get stuck in traffic. They get stains on their shirts. They sleep at night. If you can keep this in mind, it’s much easier to stand up straight, speak clearly, and maybe crack a joke. if you can be yourself from the get-go, you may find your relationship with investors much more rewarding further down the line.
4. Be Honest And Upfront
When pitching to investors, you may have a strong impulse to over-exaggerate or come across as someone with all the information immediately at hand. Investors can sniff this out in a heartbeat, and they will crush you for it. Honesty is absolutely the best policy here, and you can use it to your advantage – a confidently delivered “I don’t know” can be very effective, or at least more effective than a staggering “Well, the thing is, with that, we uh…”. Remember, investors invest in people they like and want to work with. If you can show yourself to be confident, honest, and clear, they will be much more likely to want to work with you.
5. Know Your Investors, Know Your Stage
Part of your prep work should be finding out the stage the investors that you are pitching to invest in. Investors want sales to prove that there is a market, and will invest accordingly. For example, on Shark Tank, deals valued at $4 million can expect to be valued at just below half of their ask. Deals above that tend to get about 70% of the asking values for their companies, but the majority of Shark Tank investments are in those below-$4 million companies. When pitching, it’s important to know what stage your company is in, and how to best appeal to the appropriate investors.
6. Talk Less, Listen More
If an investor is going to give you money, you need to listen. These are people with experience, advice, and funding. It is absolutely in your best interest to listen to what they have to say, and answer questions quickly and correctly. You may learn something, and you will also lessen your
chances of putting your foot in your mouth. Furthermore, showing that you have an ability to listen may peak an investor’s interest in working with you.
7. Do Not Try To Best The Investor
As in life, blatantly leaving out a piece of information is the same as lying about it. If there is an element of your business or product that you conveniently leave out, the investors will be sure to find it through due diligence. Odds are, the investors are smarter than you. That’s why you’re going to them, and not the other way around. If there is something you feel you should hide, then you need to fix it before you pitch.
These lessons, and countless others, can be gleaned from every episode of Shark Tank. It’s a great case study for every entrepreneur. Plus, there’s Mark Cuban, which should be enough for anyone. Watch it!