The founder of Toronto-based Innovation Grade Capital, David Ceolin, is constantly approached by would-be entrepreneurs. Here's advice they should heed, he says, once they get their foot in the door:
Three things to stress
Your experience in the industry: Never worked on the inside? Then your pitch comes across as naive and unproven.
Real results: Better to start something on a shoestring to demonstrate potential, than repeatedly pitch an untested business plan.
Your own investment: Why should an investor participate if you are afraid to put in your own money, or that of your friends and family? Many investors refuse to play if this financial commitment is not demonstrated, because it makes it too easy for you to walk away.
Three things to avoid
Talking too much: For every 30 minutes of pitch time, spend 10 minutes on presenting, and 20 minutes on questions. Focus on product need, market potential, competition, financial projections and other key factors. Then zip it, and impress them with great answers to their questions.
Hockey-stick projections: Investors look down on inflated projections more than overly conservative ones. Show multiple scenarios driven by assumptions that range from very conservative to optimistic. But even the very optimistic scenario should have numbers that are reasonable to achieve. (Rule of thumb: Double your expenses and assume your revenue is delayed by nine to 12 months.)
Complexity: Better to start simply and execute well than try to convince an investor that you can penetrate multiple market segments at once. Show incremental markets as a future opportunity, with an estimate of the resources you would need to get there eventually. (Added benefit: This should reduce the amount of capital you seek.)
Special to The Globe and Mail