Monday, August 18, 2008

How will your pitch go over at the pool party?

We've all done it. Corralled an investor and pitched him on our spectacularly brilliant concept for a startup. Anybody with half a brain would rush home to get their checkbook, right? But, of course, that never happens.

Think about why people invest in startups. Especially people who haven't known you for 20 years. I'm primarily thinking of angel investors you're introduced to. An angel investor has already won the lottery. They created a startup and it went big. Or they got in early on a company that went IPO. Or they made a killing as a real estate developer. Or they're the only orthodontist in a county with especially un-straight teeth.

An angel is not just trying to make money by investing in startups. They want to feed their ego. And in order to do that, they have to brag about the cool company they've invested in. This being the case, there are two absolute musts if you want an angel to invest. First, it has to be a sexy idea. Nobody will brag about investing in company that makes lower cost polyalkylene glycol.

Equally important, your idea must be easy to share. If an investor is to brag to his neighbors, his friends at the gym, to his wife, they have to be able to explain it simply. They need to show how smart they are by getting in on the deal early. They need a story or a simple explanation they can share at the pool party.

Don't think just about your pitch to an investor, think about how they share your idea at a pool party.

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