The art of finding investment is just that, an art. Founders must articulate the nuances of their business and customer base while highlighting what a potential investor might miss out on should they turn down this glowing opportunity. What founders tend to forget is that your pitch is amongst an endless pile of other companies claiming the same vanity metrics. This means you stand in front of an investor that is tired, cynical and can likely recollect a barrage of other startups claiming the same thing you are in just the past 12 months, let alone over the years.
Having worked with a number of businesses helping them evolve from startups to scaleups and all the way through to exit as well as a mentor at Foundervine, GSVlabs, Google and blackbox.vc I have seen it all.
By claiming you are the “world’s first” or throwing out vanity numbers, which tell an investor nothing substantial of the health and potential of your businesses, you immediately put yourself in the same camp which is littered in the bones of failed funding rounds.
My advice is to share figures that tell your story. This can include retention rates, conversion rates, recurring revenue gains, and even (real) user numbers.
What DOES make you standout is to be honest and truthful about where you and your company stand. Be open to both criticism and advice. It is these last two that impress investors as it means you will take what is given seriously and actually consider their many years of experience and that of other mentors.
When you prepare for investment meetings there are some key points which should be remembered:
Be honest with numbers in your deck
It’s always tempting to tell investors that “this is the next Google” or that your potential customer numbers equate to 331.9 Million (the population of the United States), but let’s be honest, do you really believe every person in the US will use your product or service? Yeah, investors don’t think so either.
Numbers are often plucked from the air and an investor will immediately be turned off when they see unrealistic figures for a product that simply isn’t there yet. Be realistic. There is no shame in smaller numbers which are achievable whilst projecting further down the company road to hit higher milestones.
Your experience (failures and all)
Your relevant experience is, of course, important but don’t shy away from honestly explaining your past. Graduating from Stanford is no longer a gold star, but instead investors are looking for proof that you have tried and overcome milestones. This shows others when faced with challenges you will not blame external sources but instead learn, adapt and grow.
The best way to showcase an investable brand is to prove there is already a buzz about your brand. Stories sell so talk about the story of your products, origin and other interesting talking points with the world. By leveraging PR you can garner interest and gain traction beyond the investor circle, showing your brand and business are already highly coveted.
By actively listening, you show any investor that you will take their time and experience seriously. Investors aren’t just looking for a great idea but are looking for people who they feel will work hard, try their best and if they fail, they will dust themselves off and take all the negative experiences as case studies to do better next time. There are countless stories of founders who continue to receive investment beyond the business they started with as investors can see a spark in the individual. Any failure will simply drive them to work harder and make adjustments to their product lineup or approach. All while aiming to do better).
I am fully aware that everything you have read sounds rudimentary but at the end of the day every single deck I have reviewed has made the mistakes the above hopes to avoid. It’s nerve wracking having to put yourself, and your company (i.e. your baby) out there, and not feel the need to over embellish a little.
What needs to be fully understood is you are up against hundreds and thousands of other business owners who are all saying the same thing, so by being authentic and realistic you will already stand out from the crowd and be a person that is memorable. That is the key. Even if an investor doesn’t drop their cold hard cash with you right now, you will have left an impression which might have them invest later.
As a parting gift, here are a few tactics which should help you on your way:
- Research. What has the VC invested in recently and does your business fit the area (whether fintech, femtech, proptech, medtech, etc.)?
- Connect. Find them on social channels and follow them. Engage in the content that they are putting out, especially as they will likely post about how to engage with them directly, what trends they currently find interesting (which you might slot into) or what not to do.
- Timing. Be considerate that you are but a drop in the ocean of startups approaching any one of these individuals, so clear and concise communication is necessary. Do not send long-winded emails explaining the history of a product, why this is “the one” or going to make them millions in the next year but instead approach with a short and sweet message as these are busy people.
Here at Gallium we regularly consult for brands and businesses looking for investment. It’s a great way to get the guidance and expertise you need to get started with finding an investor or to course correct in the middle of your investment journey. It can feel like a tough game but persistence is key. The right investor for you is out there. Good luck!