How to Pitch Investors with the Ask

0:00:00.0 Jacalyn Holsted: You are listening to Jacalyn Holsted, that’s me, and I am at On Point Conversations. I am a marketing strategist, content strategist, and also a team builder. And today I want to talk about raising money by pitching and adding investors, and then what you might be doing at this point to get ready to raise money and how you polish your pitch in order to have the best possible outcome. We are in the middle of COVID-19. Vaccines have been developed. They’re being distributed.  We are getting to a better place than we maybe were, except that, you’re still going to find that investors for early-stage companies is going to be much harder now to get. Now that may ease up as we get out of ways, but right now that’s a more difficult one. It is a very good time, though, to build relationships.

0:01:05.0 JH: And one of the things you want to do when pitching is to demonstrate how you have adjusted for the situation. So really think about how have you adjusted to the COVID-19 era with your business.  There are some advantages during this time, one is direct-to-consumer selling. That’s a very good one to have, and if you’re doing that, it’s a good one to emphasize. There are also specific categories that are doing very well at this point, one is wellness, home fitness, home entertainment things as well as technology. There are other areas also, so keep yourself open, but those are the specific ones that come to me top of mind.

0:01:48.5 JH: The investors are going to be looking for companies that have shown some profitability. Companies that are cash efficient and have been profitable. So that goes back to when you’re an early-stage company, you may or may not be at that stage yet, but don’t stop the process because you can still be building relationships and you can still be out there looking for money that’s available for those early-stage companies. They’re also going to be looking for pretty much a stable supply chain. That’s difficult too in this time, but it can be done, and you want to look for where your supply chain is and can you justify that it is a more stable supply chain.

0:02:27.0 JH: Before you just jump on the bandwagon, this is really the first things first that you should ask yourself, “Why are you raising money?” Is it really the best right strategy, the best next strategy? And are you ready? And how much are you raising? You’re going to have to have a very good idea of why you’re raising it and where will it get you, what it’s going to do for you. Also, you’re going to want to know that you’re pitching the right investors. Some investors are geared towards certain industries, some are geared to other industries. You’ve probably seen that on Shark Tank, someone will say, I decline, or I won’t be doing anything with your company because you’re not in my category. You want to make sure when you’re looking at investors that you look at investors that are in the category, so that they’re interested in that area as well as have knowledge of that area.

0:03:24.3 JH: What do you look for in finding the right investors? You have to define for yourself who is my ideal investor and why? Once you start answering that why question, you’re going to become even more understanding of who your ideal investor is. Who’s most likely to invest in your baby? Now, you can go to family, friends, individuals, angels, funds; look for those most likely to invest in this particular venture. And how and where do I find these investors? Now, a lot of internet searches, talking to people, relationship building, you will find those investors that are geared more towards what you are doing and would be more interested in where you’re going.

0:04:13.2 JH: Now, when you find them, how do you approach them? How do you convince them to give you a meeting? Again, first of all, you’re going to want to have some type of relationship and some information that you provide them ahead of time. So what do investors want to see from founders? The first thing they want to see is a vision, a passion, and energy and confidence. Now that you instill in your presentation, but you can also do that in the marketing or materials that you leave for them. They want someone with the ability to communicate clearly. They’re open to coaching and learning. So keep yourself open to their suggestions and not shut out that you are this expert and they are not. They want people that will learn with them, they want people that they can coach. Demonstrate your discipline and your focus. Make sure they understand where your discipline of focus is. Do a demonstration of how effective your problem-solving is. Be very authentic, and remember to be very courteous because courteous professionalism is very important.

0:05:26.6 JH: Investors will also be looking for a clear understanding of the opportunity, not just your product, but the opportunity it gives. Know the numbers. Know your accurate projected revenue, your accurate margins. It doesn’t do good to say, “Well, sort of, this is sort of what it is.” Know those numbers, be very accurate on your numbers. What does it cost you to make this product? What does it cost to ship the product? All those numbers that are important to the bottom line. Have a clear understanding and let them know that you have a very clear understanding of your core consumer and how you acquire them. Go into your competitive advantage and hav a very clear strategy for getting to your end game point. And keep in mind, these are people, so you want to use terminology that they can relate to. In addition, storytelling is always a good way to get people to remember something, but you want it to be very applicable to what you’re pitching.

0:06:30.1 JH: Now, before you meet, this is really contact 101, answer these questions: Have you done your research on who you are talking to? Know what is their professional experience, what are they interested in, and are they a good fit? Don’t bother with people who don’t have and aren’t interested in your product. You may not know until you get the meeting, but you’ll have a pretty good idea of whether they would be a good fit or not.  You are looking for a partner,

0:06:58.4 JH: Communication is key. Reach out and follow up diligently and courteously. Offer to send things like calendar invite, so it’s very easy for them to keep track of when your meeting is. Send brief materials and samples ahead of time, and I would say a week ahead of time, not just the day before. Give them some time to look at it. When you’re all done, follow up with a thank-you email and regular updated information about how your company is doing. And I prefer physical mail, but you can do email and follow up with physical mail, but keep them also, the key here is updated on how your company is doing in the event that they’re not taking you on now, but they might later. When you’re pitching, you’re pitching to a human being with needs, moods and interests. Pitch with the goal in mind, a focus. Speak with a purpose. How you say something can be just as important as what you say. They’re looking for passion, nothing to bowl them over or screaming at them, but something that is important to them, and knowing that you have a purpose and a longing to make this work.

0:08:14.9 JH: One of the things you’re going to want to come prepared with is a pitch deck, and that could be a PowerPoint, a slide show, whatever way you want to do it or whatever application you do it in.  What is a pitch deck? Well, first of all, it’s your very first impression. You are there, but it’s the first impression of your company also. It establishes credibility, it should have a snapshot of your business plan and your brand and your outline of the investment opportunity. Is your pitch deck everything that I just mentioned above? It’s very important to getting those doors open and outlining the opportunity, but it’s not the thing that makes investors commit. I’m going to write a blog post about this, so it’s there, but I’m going to tell you what the pitch material should include. This is like the anatomy of a great deck. You want a title page, you want an opportunity page, you want to have a value proposition, your underlying magic, your business model, your traction and validation, your marketing and sales strategy, a competitive analysis, a review of your management team, your financial projections and key metrics, and then finally the ask. Don’t forget to ask for the money.

0:09:42.7 JH: Here are a few pitfalls — avoid these pitfalls. Focus on opportunity and customer more than the product. Again, focus on the opportunity and the customer more than the product. As far as your deck, less is more. Streamline your deck, clean design, over talking can be a turn-off. Be transparent with your financials, your traction, your product issues. You want them as a partner and to be a partner, you have to be transparent with them. Be confident in your ask. And don’t act offended or defensive in a pitch meeting because that will take you nowhere.

0:10:32.1 JH: So this has been a brief review of your pitch, and what you should look for as far as making pitch to your investors. Again, I’m just going to reiterate here, you want to find and give the best impression.  Be passionate.  You want to find the right investors, the ones that are in your particular area that would be the ideal investor. And then what you want to do is you want to show them your vision, passion, energy, and confidence, your ability to communicate clearly, that you’re open to coaching and learning, that you have a demonstration of your discipline of focus, you’re an effective problem solver, you are very authentic, courteous and professional, you have a very clear understanding of the opportunity, not just the product; so you have know your market really well. You want to know the business, and that means numbers, all the numbers. If you have numbers, rough competitor numbers, that’s great too, but know your numbers really well. You want a clear understanding of your core consumer and how you’re going to acquire them. You want to have a clear understanding and clearly relate to them what you’re lasting competitive advantage is and a clear strategy to participate to end-game point.

0:11:44.9 JH: I hope that helps you and good luck on your finding of investors. We’ll be talking more about this in the future. Again, my name is Jacalyn Holsted, and this is On Point Conversations. And you can reach me at onpointthinking.com, which is where I have a contact page if you have questions or if you want to connect, and I’d love to talk to you. Thank you so much for listening.