Whether you love it or hate, television shows like “Shark Tank,” “The Profit” and others have been fueling the imagination of entrepreneurs world-wide to pitch their ideas to experts in exchange for the opportunity to build their business. Pitching an idea is something every inventor or entrepreneur will eventually do, whether it is to make a single sale of the product or to get funding for their company. Knowing and understanding who you are pitching to is critical. Unfortunately, too often entrepreneurs go into a pitch with dollar signs in their eyes instead of keeping their eyes open and ears to the ground for opportunities to learn. Whether the experience comes from pitching to a small group of angels or standing on set with the Sharks, the experience of entrepreneurs is similar and preparing is essential.
The Shark Tank Effect
Ultimately, shows like “Shark Tank” have a net positive effect on entrepreneurship. It sparks the imagination and the American Dream of building a business. Even if they do not specifically want to be on “Shark Tank,” it still inspires people to give it a try. I recently asked Henry Miller, of Henry’s Humdingers about his experience being on “Shark Tank” in 2014. “It is revolutionary for any small business” he says, “granted it is highly likely that you will not get on the show; but if you do, it will change your life and put you on the map. There are 8 million viewers for ‘Shark Tank’ so it is fantastic whether you get a deal or not. The real benefit of Shark Tank is the exposure.”
For most entrepreneurs, they will never be part of the elite few who are chosen to be on the show (not to mention the nearly 50 percent of people who think they will be on the show only to be cut before it ever airs). Besides being inspired, the best thing for entrepreneurs in watching the show is to listen carefully to the questions the Sharks ask. Other investors, venture capitalists and entrepreneurship experts agree, if an entrepreneur cannot answer the Shark’s questions about their own business, then they are not ready to pitch to others.
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For the rest of us
Since most businesses and many entrepreneurs are not “Shark Tank” material, it is important to understand what it is really like pitching an idea or business to other investors and what work has to be done in preparation. Jerry LaChapelle, a serial entrepreneur and investor, says many entrepreneurs forget to do their homework before they meet with an investor and wind up pitching to a room full of people who were the wrong audience all along. “They need to understand it is not just about them, they have to understand the needs of the investor, not just what they need.”
Pitching a business to a potential investor is also about building a relationship. Diane Kamionka, NW Innovation Resource Center executive director, has experience pitching to investors, as well as coaching others how to prepare for it. “Asking someone to invest in you and your business is more than just a potential negotiation, it is a partnership.” she says. “Knowing more about the individual you are pitching to means that you can be prepared to rapidly respond to all the forks in the road the other person may want to take.”
Practicing the pitch is also important for getting valuable feedback from other investors and entrepreneurs who have pitched before. Events like PitchFest offer a local, low pressure experience to get some first time practice in front of an audience and First Look Forum offers an opportunity for investment ready companies a chance to pitch to a select group of investors for advice.
Whether you opt to watch “Shark Tank,” “The Profit” or another show, take every opportunity to learn from the lessons others have to offer.
This is one in a monthly series about topics of interest to entrepreneurs. Lara Merriam-Smith is the program manager for NW Innovation Resource Center, a Bellingham-based organization that supports economic opportunities through entrepreneurial innovation in northwest Washington. It helps inventors looking to take products to market and connects new start-up businesses with resources to help them grow. For more information online go to nwirc.com.
Wednesday August 5, you can hear from Henry Miller will discuss his “Shark Tank” experience at the Inventor Insights event from noon to 1:30 p.m., Wednesday, Aug. 5, at 2211 Rimland Drive, Room 106. The event is free, but register in advance at nwirc.com/events, or call 360-255-7870.