The Today Show has had some major blows lately because of its huge drop in viewership, but nothing could have prepared them for the hit they took this morning. Just hours ago, Twitter, with its over 250 million active users, decided to announce its entry into the music business on ABC’s Good Morning America rather than the former morning news kingpin. My sources told me that you could hear a pin drop on the set of the Today Show as rival GMA got all cozy with one of the most sensational social media platforms.
I get so frustrated every week when I watch the small business owners ask the Sharks for money. For those of you who don’t know anything about Shark Tank, it is a weekly ABC reality TV show where entrepreneurs pitch wealthy business executives for investment money. Many of the products are tech oriented, or have some sort of a tech component. The series is produced by Mark Burnett (Survivor) and the panel consists of Robert Herjavec, Kevin O’Leary, Barbara Corcoran , Daymond John, Mark Cuban, and Lori Greiner.
A lot of people question whether a TV reality series is real. I think if you watch enough TV, and you employ your common sense, you can filter fact from fiction. After you have watched several weeks of this show, you start to understand what the Sharks want to hear about and how to get their money. Yet, week after week, I watch the small business people make the same mistakes. I have witnessed this in real life too. There is no secret what angel investors, investment groups, venture capitalists, and other money people want. They want to know at the end of the day that their investments are paying off.
Don’t give them your hardship stories, your challenges, your misfortunes, your woes, your struggles, and your yo-yo life. They do not want to hear it. Yes, they will be sympathetic, but at the end of the day, they will give you nothing.
Even in the real world, we help clients and would-be clients to raise money, and during their pitches they turn into whiney children who cry that the bullies are beating them up. There have been countless times when we rehearsed a pitch with a suitor only to go into a meeting and have them switch everything around. All of their insecurities and warts come flowing out all at once. I could tell by their body language that they weren’t going to get a thing other than a kick in the pants and a shove out the door.
These are just a few things investors want to hear about:
1. You work the business 24/7. You don’t have another job. Your entire focus is on the project.
2. You’ve already had some proven indicator that the public wants what you’re selling. The sales have to be significant and recent. If they see a gap in orders, you are history.
3. When you ask for money, don’t be a pig. Investors hate that. They will turn you down immediately.
4. If you are offering a percentage of your business in return for the money, don’t evaluate your company too high. Better to be conservative.
5. Be prepared that most investors want a significant percentage of your business for the money. They all have their calculators out. If you offer them a small percentage and ask for big money, they will tell you to leave the room immediately.
6. Only mommy and daddy will not want anything in return for the money you’re requesting. Grow up. Your idea is not genius, and it’s going to take a lot of work to make it happen.
7. You’d better be able to describe what your business is in two or three sentences. If you go around in circles, you’re a goner.
8. Know your competition like the freckles on your face. If you can’t explain why you are better and why you can beat them out, you are discounted immediately.
9. Be passionate about your business. Investors want to know that you live to be in business — not the other way around.
10. Do not indicate that you have been working the business you are pitching for years. Anything over two years smells like dead fish. You need to present exciting, new material.
There are probably a few other points to consider, but I want to point out that if you are not confident in what you are doing, you will not be getting any money. In the November 23rd issue of Entertainment Weekly, there is a two-page spread on Shark Tank. You might learn something from the article, but the heart and soul of your pitch for money is written in this blog post. If you don’t understand what you have to do, call me. I have watched the best of the best and the worst of the worst. I can give you powerful pointers.