You wouldn’t walk into a Google meeting with an idea alone.
The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way to pitch a startup idea to investors?” is written by Justin Tobin, founder and president of DDG.
Having a great idea, building a top-notch team, beating down doors to find potential investors, and then making sure you are thoroughly prepared for that big pitch meeting are table stakes in the game of, “How do I get my startup funded?” Still, many new entrepreneurs—and frankly, more experienced intrepreneurs—miss the mark in those meetings.
So, here are three things to consider the next time you have a shot at major backing:
Get customers first
It’s not enough to identify theoretical customers. Too many startups are pitching vague possibilities to investors. And that makes them nervous. Mitigate some of the risk you’re asking investors to take by starting to build a consumer base before you walk in with your hand out. Having even a small consumer base means that you can back up your claims. If there are people out there who are buying what you’re selling, you’re really just asking investors for help scaling, not simply testing out whether your idea is feasible. With customers comes feedback, and with feedback comes the ability to hone your offering as much as possible before asking someone else to believe in it. If you have customers and are generating any money at all, you’re already ahead of the vast majority of other startups.
Put yourself in the shoes of your future C-suite
You need to look at your business outside of your lens as its founder. Even if you don’t have them yet, look at your business through the eyes of your future CFO, CMO, and CTO. Imagine they already exist and will be listening to your pitch. Having a bright and shiny idea might get you a meeting with investors, but if you want to walk out of it with money to fund your business, you’ll need to be prepared to answer to every member of that C-suite. As a founder, you’re understandably focused on the day-to-day concerns of running your business. But a good investor is equal parts CFO and CMO, and they’ll expect you to be able to account for each of their concerns and examine the merits of your business through all C-level lenses. Does your business have a viable marketing plan? Are your financials in order? You can avoid getting caught without an answer to these sorts of questions if you prepare for them ahead of time.
I talk about this with my corporate clients all the time—the intrepreneurs trying to get sign-off from their CFOs and CMOs. I have to remind them that while the idea of creating a startup within their organization may be sexy and get them attention, they need to make sure they’ve got the substance to appeal to every member of their C-suite.
Treat every investor like a large acquirer
Instead of framing potential investors as individuals, approach each and every one—no matter how much money they stand to invest—as if they are a big corporation looking to acquire your startup. If GE or Google approached you with an interest in buying your company, you wouldn’t walk into their boardroom trying to pitch them an idea alone, even a really great one. You would spend weeks making sure every aspect of your business plan was buttoned up and ready for purchase. Beyond the idea, you’d have to show them the opportunity that exists for your business and for them, and most of all, you’d have to show them how you’d already proven it works. So, stand out to investors by proving that you’ve done your diligence, and that it’s worth their time to do theirs.
Every day investors hear from entrepreneurs with great, but unproven ideas. Most of the time, these end up being missed opportunities for both parties. If you want to stand out against today’s feverish startup competition, you’ll need to show that you have the steak to back up the sizzle.