According to data released by Small Business Trends, only 40% of small businesses are profitable and the start-up failure rate increases each year — what’s the problem? Money. Statistics show that every four out of five businesses fail because of cash-flow problems. More founders are relying on funds from investors in order to thrive. Competitions like the National Black MBA Association Scale-Up Pitch Challenge give entrepreneurs a chance to deliver a business pitch for cash prizes and to take their business to the next level.
C.J. Mitchell, is the co-founder of Instrumental.ly and third place winner of the 2018 NBMBAA Scale-Up Pitch Challenge. In this interview, Mitchell discusses his experience pitching to investors and has somewhat surprising advice for other black entrepreneurs seeking funding.
BLACK ENTERPRISE: Can you describe what Instrumental.ly does?
Mitchell: Instrumental.ly is a social music mobile app launched in February 2017 that allows users to create unique songs over instrumental music and shoot a video to them that they can share with their friends.
How did you find out about the scale-up pitch challenge and what motivated you to compete?
I’ve competed in the competition for 4 years in a row, and I’ve placed in the final three for three straight years (I’ve yet to win first place). I’m motivated to compete because it is the largest black-run pitch competition in the world and the cash prize would’ve helped my team scale to the next level.
What barriers or challenges have you encountered?
It’s been a challenge getting accelerators, angel Investors and venture capitalists to believe in the problem we’re solving and that we are the right team to do it.
What advice do you have for founders who seek funds from venture capitalists?
Don’t. In my experience, it’s a waste of time. You can spend countless hours trying to convince someone that you can build a profitable business and invest in you, your product, or your team and get zero success.
But if you spend that same amount of time [catering to] your customers, trying to solve problems that they care about, and improving your product/service, you will become profitable without ever needing to talk to a venture capitalist.
Then, after you’ve proven you can run a successful business at a small scale, when you eventually meet a venture capitalist, they’ll be all over you because they will admire what you can accomplish without them.
What have you learned during the process of pitching your ideas?
Not everyone is going to get it, and when they don’t, that means your pitch is wrong. Dumb it down so that a 5th grader can explain it to a friend. Try pitching to 10-year-olds to see if they can understand your business and the problem you’re solving. If they can’t, you’re doing it wrong.
What advice would you give to other black tech entrepreneurs entering this space?
Know your space better than anyone. You will get advice from experienced entrepreneurs, Angels, VC’s and qualified experts in business. It is incumbent upon us as entrepreneurs to discern whose advice is sound and whose advice is simply their opinion. The only way to do so is to know your stuff.
Black Enterprise Contributors Network