The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way to pitch a startup idea to investors?” is written by Mark Montini, chief results officer at M2M Strategies.
The opportunity to pitch investors is a significant milestone for every entrepreneur. It serves as validation that your crazy idea—the one everyone laughed at—actually has merit. It also serves as a much-needed opportunity to look up from the tiring grind and remind yourself of the bigger, world-changing vision that motivated you to start your business in the first place.
My first investor pitch was 16 years ago. I remember the details of that pitch more vividly than pitches I’ve made just last year—not because it went well, though. It didn’t. As a matter of fact, it would be safe to say the highlight of that pitch was the fact that I arrived at the investors’ office on time.
It wasn’t that my product or presentation was bad. The product was unique and had momentum in the marketplace. My slide deck was professional and my presentation was smooth. It wasn’t that I was missing key information, either. My pitch was jam-packed with market research, revenue modeling, sales projections, and other metrics.
See also: Never Do This When Pitching Your Business to Investors
My presentation failed because I didn’t understand about how startup investors think:
You are the product
I designed my entire pitch to illustrate how great my product was and how significant the opportunity was to monetize it. My narrative laid out a compelling story as to why it was a wise investment. What I failed to understand, though, was that the investors were more concerned about me than my product.
That concept didn’t make sense to me the time. After all, I believed my product was so good that anyone could be successful selling it. In other words, my pitch was basically that my plan and product were so good, I couldn’t help but be successful. I even had all kinds of data to prove it.
Well, startup investors know better.
Research shows 80% of venture-funded startups fail: 40% “fail” as in close the doors and 40% “fail” to achieve success that justifies the capital invested. That means if product and plan were the keys to success, startup investors would be incorrectly assessing those two things 80% of the time. And that’s just not the case.
So many venture-funded startups fail because building a successful company is extraordinarily hard. It’s that simple. Products and plans are important. At the end of the day, though, it’s an entrepreneur’s ability to handle the grind and weather the storms that will ultimately determine whether or not a startup succeeds.
That point was driven home a few weeks after my pitch. The investor who invited me to pitch told me his firm wasn’t going to invest. He said, “We actually like your business. We just didn’t feel you were ready.” Ouch!
He went on to explain the two non-negotiable characteristics they look for in startup entrepreneurs, which I’ve summarized below. Today, three startups and countless pitches later, this is still the best advice I’ve ever been given about pitching a startup to investors:
Bring the passion
If you don’t have a true passion for your startup, it’s easy to give up when tough times hit—and they will hit. Passion is different than excitement. Excitement is driven by circumstances. Passion can’t be extinguished.
Have the right perspective
If your perspective is that your current plan and product are the keys to your success, you will find it difficult to make the tough decision to change them—and you’ll need to change them. After all, there is one thing all business plans have in common: They are wrong.
Mark Montini is the chief results officer at M2M Strategies, an Atlanta-based franchise marketing firm that specializes in strategically integrating technology, marketing, and data to grow their clients’ bottom line.