On Shark Tank, Daymond sees a lot of entrepreneurs he’d love to invest in, but he just can’t take the risk. When someone hasn’t shown him that they know their numbers, the risks of their business or who the competition is, he has to pass. But Daymond never wants an entrepreneur to walk away from the show and give up. He wants them to take what he’s told them (and what the other Sharks have told them), and he wants them to use that information to make a better pitch next time.
Believe it or not, that’s exactly what your investors want from you. They want to invest in lucrative deals, and they want to partner with entrepreneurs who are going places. Those are the investments that make them money and keep them from working boring 9-to-5 jobs. But savvy investors won’t just throw money at any idea that comes their way. In fact, they have some really high criteria for the kinds of investments they’ll make.
So, when your investors turn down your pitch, you shouldn’t take it as an all-out rejection. Instead, look at what they’ve told you as constructive criticism (even if it didn’t feel very constructive at the time), and use that information to rethink and rework your idea, business model and pitch.
Why Weren’t They Interested?
Sometimes great ideas come across Daymond’s desk that just aren’t in his wheelhouse. He can see where they’ll be really successful businesses, but he doesn’t have much (or anything) that he can contribute — other than money. If that’s the case, then he really shouldn’t be an equity holder in the company, and he knows better than to get into a deal that he doesn’t understand or that isn’t in a field that’s relevant to himself.
If your investors reject your pitch because they aren’t interested in investing in your field or niche, then the problem probably isn’t in your pitch but in your choice of investors. This just means it’s time to start researching new investors.
If, on the other hand, they’re not interested because your idea is unoriginal or because your pitch confused them, then you have a different problem on your hands. You have to find a way to show that you’re not just doing the same thing as everyone else, and you have to figure out how to communicate that effectively. In this case, it’s time to go back to your business plan and business model for some more homework and tweaking. And, if you find that you really don’t have a good angle to make this product or service stand out, then it’s time to look at a new idea.
Did You Do Your Due Diligence?
One of the biggest reasons Daymond turns down entrepreneurs’ pitches is a lack of research. You might be surprised at how many people tell Daymond that they don’t have any competition or that their plan can’t fail. First of all, everyone has competition, and second, every plan can fail. Saying otherwise to an investor is a great way to lose them fast because it just shows that you haven’t done your homework and you’re trying to cover up for it.
If your investors aren’t biting because you don’t have the numbers and figures to back your claims up, then the only thing to do is to go get those numbers and figures. Research the market. Find your competition. Find out what sets you apart. Show the risks and rewards. The more transparent you are, and the more specific questions you can answer, the more likely your investors are to say “Yes!” the second time around.