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Pitch for Cash, Not Coffee

After sitting through hundreds of pitches and listening to requests for money, advice, and help, you learn a few things. Mostly though, you develop a mix of empathy and frustration, punctuated by occasional delight. There is no shortage of advice and tips out there on how to raise money for your big idea, so here’s some thoughts from the other side of the table:

Rarely does anything start with “a coffee”
Most of us are caffeinated enough. Spare the opening, “Can I buy you a coffee?” Instead, just come clean with what you’re after. You’ll save yourself days of meetings with people not in the market to invest, not interested in your sector, or just too time-taxed to give your idea the attention it is due.

Use a rifle, not a shotgun
While most founders will have a standard pitch deck ready to go for their investor meetings, you need to adjust each presentation to fit the audience. Too many people pitch far and wide without addressing the particular investor sitting in front of them. Each investor will have varying focuses, mandates, and interests. Do your research and appeal to those nuances.

If you won’t bleed for it, a good investor won’t invest in it

Above almost anything else, investors are looking for unequivocal commitment and passion. If you can’t demonstrate that this is your dying purpose, why would an investor risk his or her hard-earned cash on you? One thing Xero founder Rod Drury often speaks about is “bleeding blue.” Building a beautiful cloud accounting system is almost all he thinks about—it’s in his veins. When asked if he would like to invest in a company, his response is clear: “Sorry, I’m all in on Xero.”

Smart money is better than dumb money But some money is better than none

Sure, there may be people who can’t add substantial value to your business, but that doesn’t mean those investors—or their money—is dumb. Be thoughtful about what investment you take and pitch for the relationship you’d like to have. Not all investors need be equal.

Engage from the outset
You need to be compelling. If you’re not, either partner with someone who is or learn to command a room. A big part of this is being subject-matter deep: Do your homework. One way to engage attention is through conversation. If you’re just speaking at everyone you’ll get less interest than if you’re speaking with them.

Figure out if you’ve earned the right to pitch

Just because you’ve got a meeting with an investor doesn’t mean you’ve earned the right to pitch them. In fact, if it’s a meet-and-greet type situation, you could actually do yourself more harm by coming on too strong, too early. Over-pitching an investor is like being on a date where all the other person does is speak about how good he or she is. If you find yourself doing that, you’re unlikely to get a call back. Keep your pitch deck short, address any concerns you think they may have upfront, and be receptive to feedback.

Surround the opportunity

Your pitch doesn’t end when you stop talking. You need to lead the process, bundle up a few action points, and give your audience their next steps. This can include pointing them to where they can go for references, data points, or customer testimonials. If you do your job well, they will do their job well, the first step of which is fact-checking everything you said.

Don’t oversell

Seriously, no stretching the truth, presenting warped metrics, or lying. It’s likely this isn’t the first pitch your audience has heard, and if you start off sounding a little iffy, alarm bells will sound. Tell the truth and spotlight the opportunity with integrity. Too many entrepreneurs lie or base assertions on lousy facts. Google search results will slap you unconscious. Being confident and honest. Targeting your presentation to your audience and handling any concerns you think they may have upfront will help you build solid investor relations.

Good luck!

(adapted from my latest piece over at Fortune Magazine)

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