The Importance of Knowing Your Investor Before the Pitch

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Business pitches to investors are essential to the success of any business idea and its transition from concept to reality. Pitching to investors is often the inevitable first step to gathering support and funding for any business idea. Even the most original and innovative business idea and opportunity can be missed if potential investors are not convinced and do not choose to fund the idea. This is why it is essential to understand potential investors before any business pitch and to change and adapt the business pitch accordingly.

Every Investor is Different

In today's day and age, having a great idea for a business is simply not enough. It is essential for prospective entrepreneurs and business owners to not only have a direction and a clear goal for where they would like to see their business go, but also be flexible and adaptable in their dealings with investors. After all, investors control the funding behind the business, and their satisfaction is key to generating the money needed to start a business. That being said, it is essential to understand the fundamental fact that investors can vary widely in the things they are looking for in a business. Some investors may have greater risk tolerance, while others want safer investments. Some investors may want a sustainable, long-term business, while others prefer short-term profitability. The bottom line is that the presentation to investors needs to at least take their preferences into consideration. It is obviously very important to preserve the integrity of the business concept, but that doesn't mean that the pitch to investors must be inflexible and unchangeable.

Be Aware of Limitations

However, because of the fact that each investor and business idea have differing levels of compatibility, it is also important for the presentation to investors to understand that there are limits to satisfying investors. There are times when investor preferences are simply incompatible with the business idea or mode of operation. In these cases, it may be worth it to simply present the business idea as is without trying to yield to investor preferences. This can save a lot of trouble down the road, as investors eventually find out that the business idea is fundamentally incompatible with their preferences. Nevertheless, this caveat is mainly to remind individuals that business pitches should not go overboard in satisfying investors, and should not lose sight of the goal of having a successful and functional business idea.

Author: Deb Gabor Published: 2013-08-09