Two weeks ago the Tetuan Valley Startup School, program I’m proud to be a mentor at, kicked off. On the first session Alex Barrera was explaining to the teams the ins and outs of being an entrepreneur and creating a startup. We actually came up with this definition for an entrepreneur:

 

One of the things Alex told the teams shocked me: “Never pitch investors”. He actually explained the reason very well afterwards, and I have to say I totally agree.

Alex told us how entrepreneurs usually prepare their pitch, trying to give the investors all the information they need to instantly know if they are interested in investing, something like: “Hello, I’m John Doe, I just created a startup that wants to solve parking problems in major cities with a simple app you can have on your smartphone. We’re looking to raise $8,000 of investment to get everything finished.”

It is true that this is a direct and clear message, but nonetheless not a very effective way of raising money. Alex’s way of getting an investor interested in what you’re doing is much more in tune with the social aspect of today’s communications. The idea is that you see an investor at an event, probably during a coffee break and you go over and actually start a conversation with him, not just rant off what you do; the interaction would go something like this:

-          John: Hi! So, what did you think of the last group that presented/the news about [insert trendy topic]/the coffee?

-          Investor: Very interesting actually it made me think of…

-          John: Yeah! I see your point, I thought… (don’t lie to impress, just give your honest opinion).

I’m John, by the way.

-         Investor: Oh, I’m Mr. Angel.

-        John: what do you do? (even if you know)

-        Investor: I’m an early venture capitalist. What do you do?

-         John: well, I just created a new startup that’s going to solve parking problems in major cities using cell phones. Did you have trouble parking when you got here?

-          Investor: Actually, I did!

-          John: see? If you were using our service you would have saved the extra 20 minutes looking for a parking spot!

-          Investor: Interesting, why don’t you tell me more about the project?

-          John: Sure, here’s my card, let’s set up a meeting.

That would be the ideal situation probably, but you get the point. The same concept as with the elevator pitch applies: it’s about getting the investor interested in what you’re doing. The only difference is instead of assaulting them whenever you get a minute of their time, you’re starting a conversation with them which is the best platform to build a relationship from.

Until next time,

Byron Stanford for Project Presentation

Related posts:

1. Tips on how to pitch, the making of (part 1)