The entrepreneur, Darla Hall, did a fant…

The entrepreneur, Darla Hall, did a fantastic job in the session of the elevator pitch, her business itself, however, was less attractive. As a result, she got the opportunity to further discuss her business with the investors in the boardroom but failed to make a deal.

As a venture capitalist, I would make the same decision and turn her down if I were in the boardroom at that time. Here are my reasons:
1. Darla had spent EIGHT years verifying her business model. Unfortunately, she had achieved neither profitability nor rapid growth. I might have to conclude that the profitability prospects of investing in this business were not exciting.
2. Based on its growth rate and annual revenues of $200,000, the estimated value of 20% of its equity was about $40,000 to $80,000, which was far below the required $500,000. Investors usually have less interest in this level of business size.
3. The current shareholding structure of the company was also unreasonable. Darla’s equity was 51%, and angel investors accounted for 49%. I share one of the investors’ concerns that further financing will dilute the founder’s equity and cause her to lose control of the company.

Anyway, we are talking about elevator pitch here, and Darla’s performance was impressive. First of all, in just 60 seconds, she fully informed investors of her company’s history, products, business models, target customers, plan for the next steps, required investment, and proposed share of the equity. Secondly, she successfully attracted the interest of all four investors by demonstrating the unique core competitive advantages. The elevator pitch effectively achieved its purpose as a perfect ‘teaching moment’ and redirected the investors’ interest to a more in-depth discussion. Last but not least, Darla well prepared with marketing materials (brochures and hats) and with her professional looks and appropriate dress code; she managed to express herself smoothly with good time control as well. All of these helped her to win trust and confidence from investors.