Seven Things Learned from Shark Tank About Presenting to Investors
I must admit, that I’m a bit of a Shark Tank junkie. What better show to watch than one where people get to present their idea/company to 5 extremely successful business titans, with the hopes of one or several of them funding the next stage of their project. Companies like Ava The Elephant, ChordBuddy, Daisy Cakes, and ReadeREST are living the dream for an entrepreneur by seeing their vision come to reality — with a large portion due to the Shark Tank exposure and investment.
You may not be looking to get on Shark Tank, but if you are reading this blog post the chances are you may want to seek investment from an investor for a project of yours in the future. Here are a few tips and observations from the show to keep in mind when you are asking your Sharks for money:
1. Know thy numbers.
One of the repetive mistakes often seen on Shark Tank are presenters not knowing their numbers e.g. total sales, margins, profits after paying themselves. This will always tell a seasoned investor that you may have a good idea, but there are questions about your ability to run a business efficiently and successfully. To avoid this make sure that if your business is already operating that you have all of your sales info as well as expenses to show profits and losses. At the end of the day for investors, Kevin O’Leary says it best “It’s all about the money.”
2. Presentation needs to be sharper than a Great Whites teeth.
Being nervous when presenting your business to investors is understandable, I mean you are asking someone to give up their hard earned dough and possibly some of their time and expertise to help your business grow in hopes they receive a return. That being said, confidence and a tight presentation is crucial. Follow this proven method for presenting your investment opportunity — 1) Show the problem your product or service solves through some sort of visual demonstration. 2) Show your product solving the problem 3) Give facts of market potential, and your competitive advantages. 4) If you are operating already and have sales, share that information along with your projections. Here is a great recent example of a strong presentation that lead to funding Teddy Gets a Bath (Presenter #2 on the Episode) http://www.hulu.com/watch/443899
3. Play to the strengths of why that investor can uniquely help your business.
We have all heard Laurie is the “Queen of QVC”, Mark has TV Networks and an Arena, Mr. Wonderful (Kevin O’Leary) has the toy companies in his pocket, Damon has the fashion industry on his speed dial, Robert has the tech industry cornered, and Barbara… well funds everything else (successfully I might add). All that being said, the big tip to pick up is finding the investor that has strengths in areas you need. If you are a tech company looking for funding, then presenting to an older group of commercial real estate investors is probably nothing but practice. Your presentation should show the marriage of these strengths from the investor to the project, to show that they will have a bit of control over getting their money back from the business, with their strengths.
4. 5% for $200k… better be ready to wow with some numbers.
Be realistic in your valuation and have strong reasoning for the number. A high valuation of your business is the quickest way to put yourself on defense. Unless to validate your number you can show sales, patent(s)/patent(s) pending, or purchase orders in hand you need funding for — you want to be cautious presenting on concept alone. Here are two great examples of what to do and what not to do:
What to do — This lady valued her business conservatively so that she could tap into the sharks network rather than try to cash in on the first meeting http://www.youtube.com/watch?v=VmZRJqcESIU .
What not to do $500k with no sales… http://www.youtube.com/watch?v=Aq1rE3aDsyU .
5. Never call Mark Cuban “Cubes”.
You may remember Mark Cuban stating “Just for calling me Cubes, I’m out.” It may be a bit harsh, but it brings up a strong point. Be professional at all times. Humor is a great tool but don’t overdo it, use humor to ease tension and/or for creating the need of your product or service. Remember that even if you are presenting to someone that you know well, that treating them with the utmost respect is important because it establishes the way that you would treat them if you are doing business together. Investors are looking for opportunities where they can make money while growing long lasting business relationships, so that they can add to their already successful network for future projects. By being professional in your presentation and your attitude, it will set a good impression on your potential investor and whether this project is funded or not you never know when they may need your skills or expertise down the road.
6. Don’t be afraid to dress based on your businesses audience (lifestyle of your audience), but know who you are presenting to first.
I had an older client that on several meeting occasions, the subject of the importance of shaving was brought up and how he never misses a day. Now I am not one to shave everyday, but I made sure that when going to see that client I was clean shaven because he associated a clean shaven person with that person being respectful, ambitious, and confident.
If the target audience for your business is a 25-30yr old male beach bum then chances are you are presenting to an investor who is interested in that space and wearing a t-shirt and jeans may actually lend you some credibility to identifying well with your audience. What I am not saying is that forgetting about your hygeine is acceptable though. So have a nice hair cut, cleanly groomed face, no back hair sticking out (gross), clean shoes, and unwrinkled clothes.
If ever in doubt of what to wear, a classic suit and tie is always a safe way to go.
7. Establish your Salary expectations.
The question that is asked to almost every minnow in the Shark Tank is “Are you paying yourself?” The answers on the show vary to this question, but if you are paying yourself a salary you need to make it clear your intentions with the investment won’t be going to buying yourself a new boat. If the answer is no then you need to address what you will be paying yourself, since chances are all of your profits to this point have been going back into the business and part of the investment is to establish a liveable wage for yourself while you are building your business.
Bottom line you don’t want things going on in your mind like this kid in the BMO Harris Bank commercial http://www.youtube.com/watch?v=4j6Dq3l7uCk.
This is not an all inclusive list of course, however I hope you keep these tips in mind as you pursue your entrepreneurial dreams. Let us know how your latest presentation went seeking investment, we look forward to hearing your thoughts and adventures. And with that I say, Happy Shark hunting!