Watch: Why Timing Is Everything for an Investor but Money May Not Be On this week's episode of "Entrepreneur Elevator Pitch," one contestant admits he's not really there for the money.
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On the new streaming show Entrepreneur Elevator Pitch, founders step into the Entrepreneur Elevator and have just 60 seconds to present their idea, product or business to a panel of investors. Whether an entrepreneur gets invited into the boardroom or sent back to the ground floor depends on what our experts think in that first minute. Here, we break down the lessons aspiring business owners can take away from each episode's pitches.
Entrepreneurs seeking funding can often spend so much time chasing money, they lose sight of what they really want for their business. The eighth episode of Entrepreneur Elevator Pitch demonstrated that, showcasing the importance of the consulting role investors play in a startup.
Related: Entrepreneur Elevator Pitch Ep. 8: Too Many Cooks in the Kitchen
The episodic streaming series introduces us to multiple business owners, each of whom has only 60 seconds to sell investors through an "elevator pitch," conducted on an actual elevator. If the team likes what they hear, they invite the budding entrepreneurs in for an opportunity to win funding.
Here are three important lessons that came out of the most recent episode of Elevator Pitch.
Be upfront if money isn't everything.
In this episode, we first meet Ray Doustdar, CEO and founder of Buiced, a company that offers multivitamins in liquid form. Each bottle includes 30 one-ounce daily servings of the same vitamins a customer would normally get through taking a pill. Buiced is geared toward the many consumers who have an aversion to taking a pill. The team was impressed with Doustdar's pitch, with one investor even calling it one of the best he'd seen.
Related: 'Shark Tank's' Lori Greiner on the Do's and Don'ts of Pitching
Doustdar made it to the boardroom, where he asked for a $100,000 seed round with 5 percent equity. However, one of the investors was concerned that when asked, Doustdar didn't seem as though he had carefully thought through the investment he was seeking. At this question, Doustdar admitted that money was not his top concern. Instead, he wanted a partner who could help him take Buiced to the next level by driving exposure through social media and retail distribution.
If you're seeking funding, a good takeaway here is to be upfront if connections and exposure are highly important to you, not just the money. This will avoid confusion. As for Doustdar, the board agreed to partner up and give him the push he needed, as well as a financial investment.
Feeling is believing.
If you're going to invest in a company, it has to feel right. That didn't happen for the companies that came next. Karen Roma and Chris Vanderhagen pitched their mattress business. They had a display so complicated, it took a while to load it all into the elevator. Roma and Vanderhagen co-founded Design Your Own Bed, which is accepting preorders for its "ME Modular Mattress." What differentiates this mattress from others is its removable sections, which can help sleepers customize a bed to their own comfort. However, the founders failed to bring the mattress topper that might have made the mattress feel more comfortable when one of the investors tried it out. This lead the panel to turn them down.
Related: 8 Ways to Win Over Investors for Your Startup
nother entrepreneur who might have won investors over if they could have fully experienced her product was Barbara Giannetti, founder of daGiulia Pasta Sauce. Giannetti aims to sell authentic Italian sauces, made from family recipes. Although her pitch was heartfelt, the pasta sauce market is highly competitive. Not only would the investors need to pay the requested $50,000 for 20 percent to help fund distribution, but they would also have to invest millions to compete in the market. That didn't feel like a safe investment. They declined to invite Giannetti into the boardroom, saying that even if this was the best-tasting sauce ever, the market was simply too difficult.
Timing is crucial.
Sometimes a product and entrepreneur win investors over, but the product itself isn't ready. That was the case with Mike Bradford and his appliance Wonderffle, which makes stuffed waffles. Bradford wants to make food more portable by allowing consumers to pack items like fried chicken, bacon and eggs, cheese or even vegetables into a waffle. The investors immediately connected with Bradford, his charisma and his idea, inviting him in to hear more.
Related: Watch This Entrepreneur Prove That the Right Details Can Make or Break a Pitch
As they asked questions, though, it became clear that Bradford was still very early in the development process. Although he has a patent pending on his device, he had not spoken with any retailers, nor had he developed additional units beyond the initial prototype. The board told him that investing would be premature, saying they likely were doing him a favor by sending him back to get further in the process before seeking investment dollars. Once he has some revenue flowing in, they believe that he'll have better luck, since he's a likeable guy and he'll be able to give investors a full picture of what they're getting into before they commit.
Before pitching investors, entrepreneurs should be fully aware of their goals, and whether the time is right for them to be seeking funding. Make sure you tell investors that you want expertise, not just money, so they understand your mindset. Also, do the research beforehand so you know the time is right for investors to be considering your company. This will save everyone involved valuable time.