What does it take for an entrepreneur to get Mark Cuban, Barbara Corcoran, Kevin O’Leary or any other Shark Tank panelist to fund their startup? There are many answers to this question as the Sharks have put their money into everything from cleaning products to lip balm. However, there are a few things all or most successful pitches have in common. Here are some lessons you can learn from winning pitches:
- Get to the point. Like all sales pitches, you need to quickly and succinctly explain what your company does and how it will succeed. Your investors do not have all day to listen to your story, so tell them what they want to hear as soon as possible.
- Prove that your idea makes money. Sharks are quick to turn down any idea that does not have any revenue or sales. They want to invest in a scheme that will be successful, so you must be able to show them that your idea will make money.
- Explain what you plan to do. Will you use the money to open up a new location? Will your project be distributed in major retail stores? Tell your investors how you will put their money to good use in your company.
- Demonstrate your product. Some of the best pitches allowed the Sharks to get a hands-on look and feel at what they were going to invest in. This strategy also backfires, however, when the Sharks do not like the product offered.
- Protect your idea. Kevin O’Leary is quick to point out how the founders of companies like Throx and Wired Waffles can be easily “slaughtered like a cockroach” when a bigger company copies their idea. Make sure that nobody else can steal your idea and put you out of business.
- Explain your differentiation. To be successful, you must offer something that your competitors do not. You must stand out from the crowd and competing brands.
- Don’t get greedy. Sharks will not bite if the deal is too big. Entrepreneurs who ask for too much money and offer little equity will get rejected for sure.
- Know who you are pitching to. Corcoran said that the best pitch she has ever seen came from Cousins Maine Lobster cofounders Sabin Lomac and Jim Tselikis. They watched all four seasons of Shark Tank to anticipate what sort of questions and objections the Sharks would have. They walked away with a $55,000 investment from Corcoran.
Getting onto Shark Tank is a difficult process and winning their approval might be even harder. But, if you can do it, you’ll get not only funding but also a lot of free exposure to the rest of the world. Even if you never plan on getting on the show, it’s helpful to use these tips when pitching to other investors or making a case for your ideas in general.