Whether you’re pitching in front of a group of investors or pitching one-on-one with an angel investor, the words you use to explain your company and strategy are critical to securing funding. While the content of your presentation itself is important, even the best business ideas can be ruined by poor word choice or etiquette.
Investors are usually not looking for a quick win or an opportunity to take advantage of a short-term gap. You’re looking for companies that define an entire category (ie, Google and search engines, Facebook and social media, Salesforce and customer relationship management). And your choice of words says a lot about your entrepreneurial approach and your potential for partnership.
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Practice the right mindset
Investors seek unreasonably ambitious founders. Many founders make the mistake of attacking their competitors’ progress or intelligence. This doesn’t look good. Instead of attacking another company’s strategy, focus on why your company is strong.
No matter how comfortable you feel with an investor, always remember that meetings are a professional setting and basic etiquette is required. When you get in front of a potential investor, show them you value their time. Be confident in your plan, but be humble. After all, they are asking for money.
Related: How to prepare before pitching your business to investors
Use the correct language
If you have a positive attitude and a credible vision, you’ll have an edge over most of the competition. But if you want your words to generate investment, there are some words you should eliminate from your vocabulary.
Here are a few terms to avoid:
to get
Investors want an initial public offering, not a quick buyout. If you make the purchase as positive in your voice, you can hurt your chances. To attract investors, present your business as an investment opportunity with IPO potential, not a quick win.
Disturbing (and other similar buzzwords)
Using buzzwords to explain your plan or product is uncomfortable for many investors. If you’re tossing around words like “aggressive,” “visionary,” and “innovative,” they suspect you’re using them boldly. Many founders before you have used similar words in their pitches and failed to back them up with details. Most investors rely on pattern matching, so your buzzword usage is a bad indicator.
Sole founder
Building a company is hard, but it’s 10 times harder if you try to do it alone. Can’t say it’s impossible. Stitch Fix had a tumultuous start, but CEO Katrina Lake largely led the company to its IPO. However, investors usually like to see strong co-founders and team members who can support each other through all the ups and downs of a business.
Channel sales
If someone else controls your client relationships and income, you should expect to pay heavy taxes. Apple’s App Store, for example, takes 30 percent off all in-app purchases. Although channel partners help with distribution, investors don’t like the amount of revenue they take.
Also, when you scale, your channel partner will probably try to compete with you (ie, Spotify and Apple Music). That doesn’t mean channel marketing is impossible. For example, Supercell has built a nine-figure mobile gaming business through app stores, but this approach may scare off many investors. You prefer to have direct contact with your customers and handle the relationships yourself.
Regulated markets
Investors want customers to buy your offerings quickly and without legal restrictions so they can scale your market. If your target customer is choosing vendors (e.g. proposals for local governments) or your product itself must comply with challenging regulations (e.g. HIPAA in US healthcare), you should expect your sales to take months. , not weeks, to close. This makes you less attractive to investors.
Yes, some companies make money in regulated markets, but winning over investors with a business plan that involves navigating extensive regulation is much more challenging.
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Summary
Tips and tricks are a dime a dozen, but remember to focus on word choice when pitching your business. Use the right language to your advantage and create a sincere tone that will encourage investors.
Originally published on July 5, 2020.
