Enter The Dragons Pitch Perfect
Mar 16, 2009
I like to watch BBC America, and one show you must see is Dragon's Den. I can explain its premise succinctly in one phrase. It's "Simon Cowell meets the Elevator Pitch".
Set in a trendy warehouse, a team of Millionaire "Dragons" are empanelled to pass instant judgement on a parade of aspiring enrepreneurs, and make instant investments to the winning pitches. True to the Simon Cowell formula, the "contestants" include eccentric dreamers, annoying young men, incompetent accountants and naïve housewives. The panel swiftly dismisses them, as they elicit such mistakes as a lack of planning, poorly thought out revenue projections, stumbling over figures, over-leveraging and ridiculous optimism. Hard faced Dragons tell the dreamers - who have typically invested their life savings in such sure-fire ideas as a 3 minute egg boiler - that they should keep their day jobs and that their ideas are crazy... but that they might be willing to give them $50,000 for 80% of their company. To underline the point the Dragons have piles of cash sitting on the table.
But, again true to the reality formula, there is always one business owner who clearly has a winning business model with all the right answers, and then the tables are turned as the Dragons start to outbid each other for a piece of the action. The audience cheers. Compulsive TV watching if you have any interest in business.
I find myself evaluating the entrepreneurs, who despite the wealth of web site information seem to stumble at the first fence, as they begin their Elevator Pitch. So what are the Dragons really looking for?
The very first thing any successful pitch for anything in life needs to do is grab your attention. Sadly, this is where many great ideas fail. Investors don't have time or the patience to pick through the business and uncover a really good opportunity. So make sure you get peoples attention with your opening statement.
- What is your product or service?
Briefly describe what it is you sell. Do not go into excruciating detail.
- Who is your market?
Briefly discuss who you are selling the product or service to. What industry is it? How large of a market do they represent?
- What is your revenue model?
More simply, how do you expect to make money? Do not say, "It's a $6 billion market, so if we can just get 1%...." Investors hate that.
Now that you have their attenion, it is critical that you think about how you can demonstrate credibility so that desire is underlined by credibility. Another way to think about this is how is the risk minimized?
- Who is behind the company?
"Bet on the jockey, not the horse" is a familiar saying among Investors. Tell them a little about you and your team's background and achievements. If you have a strong advisory board, tell them who they are and what they have accomplished.
- Who is your competition?
Don't have any? Think again. Briefly discuss who they are and what they have accomplished. Successful competition is an advantage - they are proof your business model and/or concept works.
- What is your competitive advantage?
Simply being in an industry with successful competitors is not enough. You need to effectively communicate how your company is different and why you have an advantage over the competition. A better distribution channel? Key partners? Proprietary technology?
Finally, there should be a call to action. It constantly amazes me how many great pitches just end with, well, nothing! When you get to the end of the pitch make sure you have spelt out what you want the person to do next. It could be to buy your product. It could simply be where to contact you for further information etc.
One more Dragons Den Pitch - a chip making machine. Is this for real?