HOW TO PITCH TO A SCHOOL OF SHARKS
Written on the 13 March 2015 by Laura Daquino
BEFORE feeding your business idea to Sharks, find out what will score you the biggest bite.
"I don't mind if they are nervous - lots of people come across exceptionally nervous when pitching on the show - but a lot of other things bug me."
Don't be a hypocrite
"Having a split focus will never work," says Baxter.
"Some entrepreneurs have a day job or another business following almost like a parallel path where they are trying to do both at the same time.
"I don't like it when they are hypocritical and won't buy into their business - going from one safe job to another."
Know how to add up
"There's a reason you can put a high valuation on a business and no one to date on Shark Tank has given a good reason as to why they can do this," says Baxter.
"Valuations that aren't backed by any reasonable judging of the problem and the solution - worse when you have a solution to a problem that never existed - really don't sit well with me.
"Valuation for me is putting a risk premium on the entrepreneur being able to carry through with that business judged on their level of skill in terms of being a businessperson.
"Another important thing about numbers - if you don't know yours, then you really shouldn't be in business."
Demonstrate traction in a tangible way
"I like investing in traction, which is best proven through revenue but can also be proven through usage," says Baxter.
"Facebook is a good example of a business that had high usage in the early days coupled with no revenue, but was always a great business.
"Some businesses have low traction but revenue multiples or density are quite good."
Don't try bartering on your last legs
"It's very hard to negotiate with a single buyer," says Baxter.
"If you only have one investor left in the game, when you change your bid you are only bidding against yourself."