This may sound odd, but I quite like being sold to. Let’s push the clumsy and misplaced pitches to one side for a moment – they are a waste of everyone’s time. What I like to see is someone with a product I think I want, that meets a need I know I have, at a price point that is right for me at the time. With this combination, it is easy to buy that product, that service, or even invest in that company.
If you are raising funds for your company, the same rules apply, and if you take a moment to look at it from the buyer’s side, you may find a smoother path ahead. What do they really want, and what would make it easy for them to say yes?
It’s tough, because, for a brief moment, the thing you are selling has morphed to become you, your team, and your plans, rather than the technology or solution you have developed. Can you switch tracks to present the three magic messages:
- something they want;
- something that meets their needs; and
- at a number they are willing to give you?
Scaling up a business is an ill-defined, potentially long and uncertain road towards the success you imagine. It clearly needs money to go there, but how much isn’t clear, and so you may be tempted to take as much as you can get.
Accepting more money usually means giving away more of your company, which is hard to swallow at any stage. And a big budget, without a clear plan to use it, suggests uncertainty and doubt, which is usually a turnoff for investors. They prefer to deal in clarity and confidence. These two commodities go both ways – your clarity in what you are about, and why, will help them to understand you better. Your confidence in the plan, and the reliability of the outcomes, stimulates them to have similar confidence in you, and be more likely to support you.
So, if you are preparing an investment pitch, take a step back, and look at it from the other side. How easy is it for them to ‘get’ it and say yes?
A good start will be to focus on a few priority points:
- What does finished look like? – not the forever finished, but the next phase that you want this round of funding to support.
- What is the route to get there? – a workplan that will get you from here to there, in enough detail to show you have really thought about it, and can defend it.
- How much will it cost to get there? – if the workplan is sound, you can cost it, then add a bit of contingency, and that is what you need to ask for.
- How long will it take? – this is the runway, and puts a stick in the ground for the next round of funding.
- What might get in the way? – known obstacles should already be in the plan, and of course there will be risks, so recognise the most likely or significant, and build some mitigation into the plan.
Clear answers to these questions will mean that you have a plan that is believable and can stand up to scrutiny.
The hardest question of all may well be ‘how much of someone else’s money are you worth?’ If you can get to the bottom of that thought, then you can step into a more comfortable place where you know what you are asking for and why.
If you have done your homework on the investor, their preferences, and investment habits, and are in their hotspot, then you have made it easier for them, and your chances of a positive answer are even higher.
It may even give you the luxury of choosing your investors. Imagine being over-subscribed, and of course, resisting the temptation to take in more money than you need. Only then, because you asked for what you actually need, can you choose who you really want to work with. Then, it is all about execution, but that’s a whole new story.