While I have created successful (and not so successful) divisions at large corporations, managed M&A evaluations for large tech, educational, and media companies, and just in 2012 helped to raise one series A and raised a seed round for my own company, I don't think of myself as an expert. Each fund-raising event is a unique opportunity, and the unique players, economic environment, and business climate affect the dynamics of the process. What I have learned is that the pitch is really a basic exercise in Communications 101. You need to focus on the message (story), the target audience, and the delivery mechanism. The three elements intertwine and need to be adjusted depending on the occasion.
As I was preparing my story to share at Seattle University, I came up with the following four steps. These are not perfect or foolproof. They are just what have worked for me in the past, whether talking to investors in the Bay Area, Seattle, New York, or London.
1.- Understand your audience so you target the right investors. If it were only money, you would go to a bank. Trust me, money is the least of your worries.
- Find investors that complement you. You want experts that can balance your blind spots on go-to-market, business development, technology, etc.
- Go beyond your zip code, beyond your state. Get outside the echo chambers.
- Forget you are raising money. You are simply asking for feedback on your venture and for intros to potentially interested parties. The best (quality) money comes from those that align with your vision, and they will encourage you to take it from them.
3.- Create a leave-behind executive summary and save it in a folder in the cloud alongside reference material, team bios, and professional references.
4.- Focus your story on five key areas.
(A) You. (This is a personal loan backed by zero assets but you.)
- Why should I trust you with my money? What have you done before? What have you completed, launched, created?
- How do you deal with ambiguity and quick decision-making? How do you deal with failure?
- What inspires you? What do you believe in? What are your motives? If you say this is for the money, I stop listening. Startups require passion and persistence, which flows from purpose. Find your purpose.
- Can you afford it? The first leg is an 18- to 36-month trial period. Can you and your loved ones afford it?
- What is the problem you are looking to solve? Keep it simple.
- Do you have the problem? If you don’t personally have the problem, that's a major warning sign. I need to see who in the team is an expert on the problem area.
- What’s the opportunity? Not a hockey stick but a good sizing of the addressable opportunity and what makes you think it is addressable.
- Expand your idea of value. Define your value in human terms, not in business terms. Your real value is about what you believe in, what you’re trying to do in the world, and how you make others’ lives better.
- Can you describe it in a few words and is it easily understood?
- Are you addressing pain or providing pleasure? Talk about PEOPLE, not about users, and let them speak through you.
- Is it easy to try, easy to observe?
- What is your relative competitive advantage?
- How do you plan to take it to market? Have you done it before? Show me the numbers.
- i. How will you make money?
- ii. What are the key metrics?
- iii. How much cash do you need and what for?
- What are your blind spots and how does the team complement you? How does the team complement each other?
- What great teams have you built before? How will you build this one?
- Technical and marketing skills – find the balance.
- Finances and biz dev – always overlooked.
- Mentors and advisors – the real deal. Think value added, not a list of names.