Ohio TechAngel Funds (OTAF) sees dozens of business plan presentations every year. When a business plan gets our interest, we invite the entrepreneur to come in and present to OTAF’s management. It’s 13 minutes of presentation and another 15 to 20 minutes of questions and answers.
If the management team is strong and the product has been validated in the market, it is invited back to provide the same presentation to the full OTAF membership at the bimonthly member meeting.
We want to hear the entrepreneur tell his or her story, and we want to hear it multiple times. We’re looking for the facts of course—and the big marketplace problem that the company’s solution is trying to solve.
But we’re also looking for something else.
We call it The Blemish.
Every startup has problem spots.
After we’ve heard an entrepreneur’s pitch, OTAF members discuss the deal. Some of us will be outright advocates. Some of us will be on the fence. Some of us won’t be interested at all.
But all of us know that no startup is perfect. We belong to one of the most active angel groups in North America. We’ve been at it for more than decade. No matter how compelling the technology or market need is and regardless that many of us are entrepreneurs ourselves, and tend to be optimists—we don’t let ourselves forget what kind of companies that we are investing in.
They are startups. They all have incredibly high risks. These are never perfect investments.
So, to vet ourselves and curb our own enthusiasm, we like it when an entrepreneur is up front and honest about the challenges. It adds credibility when an entrepreneur points out a major risk or perhaps an early misstep. That shows us that he or she knows that everything in the proposed business plan isn’t milk and honey. That they’ve tried things that didn’t work. And that they used what they learned to take a smarter approach.
We know that there are blemishes. They are things the company needs that it doesn’t have. Otherwise, why would they be willing to give up equity?
Talking about The Blemish is an opportunity for an entrepreneur to be a little self-deprecating, to poke fun at himself. It can be as simple as telling the audience you have great offices—in your parents’ basement. One entrepreneur proudly informed us he had surveyed all of his customers to come up with the data on a slide he was showing. His customer sample size? One. It was tongue in cheek, and it was great. He wasn’t delusional or unrealistic about where his company was on that day, and we could tell that he was grounded.
It’s not a bad thing to demonstrate that you can look at yourself and know where some of the soft spots are in what you are doing today, not that those won’t be fixed.
The purpose of a business plan pitch is to get a foot in the door.
The definition of entrepreneurial success is to get a second meeting with people in the room. At OTAF, if any entrepreneur meets and gets business cards from five or ten of our members who are interested in hearing more, that’s a win.
Be straightforward and honest. Be proud of who you are as a startup and be confident of what you’ve done so far. Own what you’ve done and what you have yet to do.
One of my mentors coached me on how to mentally prepare before presenting to any group. Before you go up, think to yourself that no one knows my content better than I do and no one in this room is going to have more fun than I will in the next 15 minutes as I deliver this presentation—even when I touch on a blemish or two.