In the venture financing world, there are entirely too many CEOs and entrepreneurs that still believe their enthusiasm will justify their cause. But there is a cold hard reality that any fledgling business leader needs to understand.
Enthusiasm is not a substitute for competence.
Every investor I know, myself included, would tell you that the leadership team of a company is the single most important part of a startup’s plan. As such, the quality of your leadership is going to come under enormous scrutiny during your business pitch. And investors are experts at determining character.
A majority of the questions asked by investors following your pitch are likely not aimed so much at getting accurate information out of you, so much as they are to determine if you can realistically answer the question without making up fluff.
The key to preventing your enthusiasm from appearing unfounded is by making sure your analysis is complete and well-grounded.
If you’re an entrepreneur primarily rooted in the technical side of the business, you might be asking yourself how you are going to answer the business mechanics questions with any clarity.
Realize that knowing your skill set is a part of competency.
If you are a technically skilled entrepreneur, but not terribly experienced with operations, bring someone on to your team that can more adequately cover those skills. There is a reason businesses require leadership teams, rather than rely solely on one person.
No one is expected to be able to handle every facet of a company. It’s an impossible task. Simply make sure that you have included a range of performers in your project. If you plan on acting as the CTO, you’ll particularly require people skilled in operations management, finance, sales, and marketing.
Far better than fumbling through a question about how you intend to overcome scalability issues with your business, would be simply saying that you have someone on-board who can handle those problems. And then turning the floor over to them.
Proving business competency is dependent on knowing your identity.
There are a million ways to make a million dollars. Which means there is some reason you are putting countless hours of toil into this particular venture.
Your personal motives and passions will give your company its identity. The company’s identity will set the tone for every relationship it creates and every operation it runs.
If the bottom line really is your only concern, there is a very high chance that your view of your venture’s potential is going to leave your head in the clouds and your enthusiasm at an all time high. On the other hand, if you are engineering a business that will create value, something beyond high profit margins, your passion is likely to be a bit more grounded and methodical.
To create more than profit, it’s imperative that you know what makes you a true believer in this business. What is driving your company that makes it any different from the league of competitors it already has? What value are you offering your consumers beyond the usual, “it does what it does really, really well.”
When you understand what you really believe in, you’ll understand why there is cause to be enthusiastic about your business in the first place. And if you can convey those reasons in your pitch, you might even be able to convince your investors to share in that enthusiasm.
Having the opportunity to bend an investor’s ear shows that you’ve proven that there is potential for your idea. Now is your chance to demonstrate that your team has the competency to capitalize on it.
Enthusiasm is necessary if you’re going to hold your audience’s attention long enough to make your case. But you have to know why there is any value to the project and how you are going to make it a reality if you plan on taking things further. Enthusiasm counts, just be sure it’s not the gilding to a hollow idea.
When you walk into your meeting, you will be far more likely to secure funding if you know that the sweat you put into your preparation can match the eloquence of your presentation.