Fishing for Investors: Tips Gleaned In the 'Shark Tank'

Posted June 04, 2013

— By Janine Popick

If you've ever watched the popular show, Shark Tank, you've witnessed budding entrepreneurs pitch their ideas, products or services to "shark" investors. You can apply many of the Shark Tank lessons to real life, too, whether you're looking for investors or just delivering a quick pitch about your company.

These three tips can help you reel in investors and avoid getting chomped by the sharks.

How to Land Small Business Investors

1. Nail Your Pitch

Whether you're presenting to one person or to a panel on national television, you've got to nail your pitch. You need to know—and articulate—what your company is, what it isn't, who it's for, who it's not for, how you're different from competitors both large and small.


You'd also better know if someone else has done something similar, how they fared and how you'll be unique. Be honest and straightforward. This is not the place to "fake it 'til you make it." Investors are a savvy bunch, and they've seen and heard almost everything.

Work creativity into your pitch to hook your potential investors from the get-go. Tell the story of your biz and how it came to be in a compelling manner. Being memorable and charismatic shows investors you've got what it takes to sell your business and your product—two key things they look for.

2. Know Your Numbers

One of the first questions you'll hear from potential investors is, "What are your sales?" This is followed quickly by, "How much debt do you have?" These two key questions help any investor assess whether the valuation of your business is realistic.

Many a Shark Tank entrepreneur has been sent packing for this reason, so pay critical attention to the details when it comes to what your biz is worth. And be sure to offer potential investors a fair shake. For example, asking for a $250,000 investment for a 10 percent share might not be very enticing for investors. You've got to share the wealth if you want their help.

Make sure you've have street cred in the form of significant sales, or even potential orders from a large or well-known source, which will translate into sales in the near future.

3. Back Pay is a…Well, You Know

Unless you want to get kicked to the curb swiftly, do not ask for back pay. Avoid saying anything that sounds remotely like: "We've got $200,000 in debt for unpaid salaries because we didn't pay ourselves for the first two years."

Time and time again, naive entrepreneurs get chomped for committing this fatal error. Reality check: when you're just starting out, or even for the first few years, you might not get paid for a while. If you can't deal with that, you might not be cut out to swim with the sharks. But, if you're willing to draw nothing, or a small, reasonable salary, most investors get that you need to eat and keep a roof over your head.

What experiences can you share about successfully attracting investors?

Janine Popick is the CEO and founder of VerticalResponse, a provider of self-service email, social and event marketing solutions for small businesses. Connect with her on Twitter at @janinepopick.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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