JTank is a revolutionary platform that enables entrepreneurs to present their business plans to a group of veteran investors in the hopes of securing a deal and a lifelong partnership. What happens behind the scenes at JTank, and what makes for a successful pitch? The average entrepreneur enters the Tank with an idea, product or service. However, it takes more than a dream and a ready smile to win the attention—and a financial commitment—from the experienced Moguls.
When an entrepreneur steps into the tank, he must convince the Moguls to part with their hard-earned cash and provide the funding that may turn his dreams into a million-dollar reality. However, the Moguls have a goal, too—to get a return on their investment and own a piece of the next big business idea. According to data from the US Bureau of Labor Statistics, about 20 percent of small businesses fail within their first year. By the end of their fifth year, roughly 50 percent of small businesses fail. After ten years, the survival rate drops to approximately 35 percent. What kind of pitch will prove to a mogul that an entrepreneur’s company is a winning proposition? As someone who screens the investments, guides the entrepreneurs through the process, and is involved in the due diligence phase, I have identified the key factors that make a pitch—and new business—successful and sustainable.
Prove It
Your friend has come up with a great new product for your home. Your neighbor shares an idea for a new service that will change your life. A co-worker has built a better answer to a problem that is plaguing your office. Do these exciting and fresh ideas make for a successful new company? Maybe not. A new product or service will be successful if it answers a need or solves a problem. But not all innovations are universally embraced, and few new products are met with the passion and excitement of their inventor. In order for a mogul to recognize the potential of a product, the entrepreneur has to demonstrate “proof of concept.”
A proof of concept is a presentation of measurable evidence that an idea, product or service is feasible, and not only has the potential to be fully developed but can be sold to the masses. Although a prototype, product sample, market research and pilot-tests may be impressive, a mogul wants to see that the product or service is salable. Accordingly, convincing proof of concepts—such as initial sales figures, crowdfunding support or a strong web presence—is necessary to satisfy the investor that your nascent company is heading upward and is worth the risk of investment.
Make a Plan
An entrepreneur’s proof of concept is an introduction to his fledgling company, but to build a case for that company, the entrepreneur must develop a solid business plan. A business plan is a written description of the future of the business. It’s a blueprint that tells the story of what the developer plans to do and how he plans to do it.
A business plan doesn’t have to be complicated, but it must include the information and narrative that turns an idea into an actual business. It must describe the product and tell the potential investor how that product is going to be produced and distributed. How will the company be funded and how will it operate? The potential investor is not considering the product because he wants to help make it famous; he wants to assess the risk of an investment and quantify the bottom line. Finally, the business plan should define the company’s marketing strategy, including its target market and the ideal price point.
Two essential components of a successful business plan are its operating plan and its financial plan. An operating plan incorporates plans for the company’s physical facilities, source materials and potential suppliers. The plan will also introduce the corporate structure of the company and personnel requirements.
The company’s financial plan presents the potential investor with the facts about the company’s financial status. If the product or service is already up and running, the financial plan should include historical financial data. The company should also generate reasonable and attainable projections that will demonstrate its potential earnings and growth, and metrics such as the break-even point. If practical, a professionally prepared business valuation can add substance and legitimacy to a company’s business or financial presentation.
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