Types of Investors for Startups
In the beginning, you usually ask for seed money from friends and family. They care about you personally. They know you and they trust you. For them you need an emotional appeal about you - and about this new and exciting wonderful project that you will create, bring to market and make everyone rich. These people are not "Mr. Wonderful" of Shark Tank. They are not spending time analyzing your potential profitability or ability to make them rich. They just need to decide whether to support you personally or not. As I said before, it's an emotional sell. You are selling yourself and the "sexiness" of the product.
Once you've acquired this round of funding, you are in the position to create the base of your company, get your prototype developed and maybe even find a couple of customers. Now you are ready to go to the big boys (and girls) and scale up so that you can hire help, get space, and start creating inventory and selling. The investors you need to reach out to are much more sophisticated, probably not close to you - maybe second or third degree of separation - and you are asking for a bigger bundle of money. Your investor pool are the Sharks in the Shark Tank.
Their questions are about profitability, your ability to put a team together that can execute well, the competitive landscape, your ability to scale, and what's in it for them. They will take limited risk with you. You need to "sell" the company - not the product. They only want to know if the product has the potential to make them a bunch of money.
Assuming you succeed at all levels, you may want to scale up astronomically - you now reach out to the community of Venture Capitalists. They make "Mr. Wonderful" actually look wonderful. They want to know if you can be taken public so that they can make a huge profit on their investment. They want to destroy your management team (that you've so carefully developed) and bring in their own. If you go along with them, the odds are high you will lose control of your company. Selling your soul to the devil?
At each of these stages, your approach will be vastly different. Like all good salespeople will tell you, "you gotta know the territory." You have to know your audience and how to make your presentation so that it will appeal to them.