Giving a pitch can be one of the most daunting challenges an entrepreneur can face. One doesn’t need to be particularly stage-shy to be nervous about presenting their business plan to potential investors for them to mercilessly hack away at it in order to decide whether you and your company are worth their money and risk. There can be a lot hinging on making a good sell of yourself, and it can be what makes or breaks your fledgling venture.
Shark Tank is one of the most popular reality TV shows on air, and revolves around this concept of the pitch. Entrepreneurs must pitch their company and idea to a panel of hardened self-made businessmen and women, the “Sharks”, in the hopes of securing an investment.
Shark Tank, aside from being one of the most popular business-related shows of all time, also has a lot to teach us about the pitch. On screen, companies often find their success or their failure in the form of a successful or botched pitch session in front of the Sharks. Though some elements of the show may be romanticized for the TV screen, the patterns of the pitch themselves remain similar to what you might encounter during your own, and so there is worth in learning the lessons the Sharks hand out in their merciless interrogations.
The first lesson is to Know Thyself. Have realistic expectations about what your company is worth, and play to your strengths. The millennia-old adage of “something is only worth what someone is willing to pay for it” still applies in front of potential investors.
One of the main points of contention between the Sharks and the entrepreneurs facing them is often the “valuation” of the company, as calculated by the equity given away to the money received. Sometimes, the Sharks will immediately pull out of negotiations over a company whose owner valuates far too highly, but on the other hand, setting it too low can mean you’d get the wrong end of the deal when they pounce on your weakness.
Another issue that often comes up is differentiation. “Why couldn’t I go open up a business doing the same thing as yours and swipe your customer base?” This is a question that often comes up on the show, and one that isn’t always easy to answer. But even if it doesn’t come up in your own pitch, it is a good idea to have an answer for it. If your company is the only one that can do what you do, it makes much more sense for your potential investors to take a risk with you.
If the first lesson to be drawn from Shark Tank is to “know thyself”, then the second is “know thy enemy”. Much like the Sharks won’t take a deal out of compassion, so too will your potential investors only “bite” if they see their own profit in you, and your pitch, so you must show them what they want to see. One thing all contestants on the show do is know exactly who the sharks who will see them are, who will be most interested in what they’re selling, and who they would prefer to get an investment from.
You too should always try to be aware of who is going to be in the room and listen to your pitch when you make it, and adjust your message consequentially. The key to a successful pitch is to make potential investors want to be a part of your venture, and in this endeavor a canned and generic message will not do.
So next time you must prepare to make your pitch, make sure you know yourself and know your public before you head in, and you might go home holding a big catch, rather than becoming shark bait. Good luck.