The Top 10 Angel Investor Groups

August 15, 2011

An effective elevator pitch can be crucial for entrepreneurs trying to secure funding from angel investors. The goal of the pitch — written or delivered face-to-face — is to briefly share the who, what, where, when, why and how of your business, while piquing an investors interest. The tricky part is cramming all of that into one explanation that, hypothetically, should be delivered in the time span of an elevator ride.

The pitch has to grab me quickly, says Paul Silva, manager of Springfield, Mass.-based angel group River Valley Investors. For instance, with written pitch applications, we read the first few sentences and then toss half to two thirds of them away.

The best pitches, he says, describe the market the business is in, explain what problem it solves and demonstrate a track record. The worst ones fail for countless reasons.

Here are five of the worst elevator-pitch mistakes entrepreneurs make — and how to avoid them.

Mistake No. 1: You dont explain what problem your business solves.

Some entrepreneurs spend too much time talking about how his or her product or service works and not enough time explaining what problem it solves, says William C. De Temple, founder of investor group Maximize Angel Investments Orlando Inc. People buy solutions to problems, he says. Dont tell me about how your lawn fertilizer works. Tell me about my lawn.

The Fix: Share why customers will buy your product or service.

If you dont understand or cant explain what problem youre solving and why customers want to give you money, then were probably never going to want to invest in your company, says Kyle Harris, a managing director at New York City-based angel fund Liquidity Works. Harris poses three questions to startups that you should be able to answer in your business: Whos your best customer? How much money do they make from buying your product? And, how much money will you make from selling it?

Mistake No. 2: You offer too many facts and numbers.

Entrepreneurs often use statistics to help explain their business. While some figures — such as your sales and revenue — are important to establish a track record, dont go overboard, Silva warns. Leave out the step-by-step numerical proof of your market size, he says. Be compelling. Save the reams of facts for later.

The Fix: Tell a story.