The Gong Show has an interesting article on a different style of presenting an investment to an investor. After the introductions and small talk, start the presentation by highlighting the reasons not to do the deal. In other words, present the key assumptions or risks in the deal. By getting these issues out of the way, the presentation can focus on the reasons to do the deal.
This is perhaps an extreme approach to pitching but it has several advantages that should be in every first pitch:
- It conveys honesty
- It shows a more profound understanding of the business concept
- It focuses the pitch on the key issues for the investor
- It weeds out the uninterested investor more quickly, saving you time
Suffice it to say, you are supposed to have mitigants for the risks identified and these are further developed in the presentation.
If you are going to use this up front style I would make one exception. At the end of the presentation I would briefly mention felony convictions, tax liens, personal bankruptcies or Attorney General or SEC investigations. Up front these issues might consume all the alloted time or turn off the people before you get to describe the business concept, but you mention such items in the first meeting.
Sophisticated investors are very methodical in risk analysis and they are going to discover the issues eventually. The key is to have the honesty and experience to correctly identify the major risks. I have used this type of approach for thirty years and it works effectively worldwide regardless of culture with sophisticated investors.
Note: This approach is for pitching sophisticated people, which would be my preferred source of capital every time. I have never pitched friends and family but honesty is still the best policy if you want a chance to be invited back to Thanksgiving dinner after the company fails.