How to win the hearts of investors During my eclectic career, I founded my own company, worked with many startups, and met many investors. I’ve coached startup founders in pitching, PR and go-to-market. If you’re an entrepreneur seeking investment, you have to win the hearts and minds of investors. You have to get them to say ‘wow’ and fall in love with you, your team and your product or service. But how do you do that?As part of my previous corporate work in the tech sector, I had the opportunity to learn from experts in their field, including Bill Reichert, managing director of Garage Technology Ventures, which Guy Kawasaki founded.
According to Bill, there are ten things startups need to do to win the hearts and minds of Silicon Valley VCs, or any investor.
1. Stand outYou must stand out and remember that high confidence is more exciting than false modesty.
The key is to exhibit high confidence and a) be clear about what you’re doing and avoid high-level, abstract statements that don’t mean anything; b) offer some compelling value by being ten times better, faster, and cheaper than the competition that will cause your customers to fall in love with your product; and, c) you’ve got to be credible by showing evidence with testimonials and traction, for example.
2. Get your fundamentals rightBe sure to do things right from the start. This means being clear about founders’ stock allocation and restrictions, having your IP properly protected, demonstrating legal compliance, and ensuring robust and organised contractor and advisor agreements in place so that when you’re ready to seek investment the due diligence process will be straightforward. Have good lawyers who make sure your foundation is strong and clean.
3. Get your numbers rightMake sure you understand your core numbers. Many entrepreneurs trip up and get figures wrong regarding market size by quoting absurd numbers that ruin their credibility. Talk about your specific market opportunity, highlight who your target customers are, where they are, how they buy, why they buy, what they are buying now, how you’re going to find them, how you’re going to get to them and how you’re going to convert them.Be careful about quoting projected revenues. Model your success on other successful companies, not on Excel spreadsheet calculations and when you’re asked how you will achieve your figures, you at least have evidence of someone who’s done it before. Remember that every investor will drill into your unit economics. You must know your numbers inside out and back to front. If you know your numbers well, it will separate you from the rest of the pack. Getting this stuff right is part of standing out. And when it comes to your value expectations, investors want you to be bold but not crazy. It helps to build a dashboard to track your KPIs. If you can show investors you always have an eye on company performance and KPIs, they’ll be stunned.
4. Build an unbalanced teamYou need a balanced team in terms of skills and an unbalanced team in terms of outlook and perspectives. It doesn’t help to have everyone on your team reaching for the stars if it’s unrealistic. Someone on the team has to be grounded and realistic. But different perspectives can create conflict, but this can be a good thing as the key to success for an entrepreneurial team is to bring these different perspectives together and to have models for reaching an agreement. Disagree and then commit. Find a way with company values and goals to take these different perspectives and find the compromise, find the area of consensus and move forward. Accept that it’s worth fighting to get some of the best ideas out on the table.
5. Steal Be an innovator, not an inventor as inventing takes time and money. Investors want you to borrow things from elsewhere and put them together in new ways to build novel products and services. Most successful companies you see today are not built on their technology. They’re built on technology and ideas they’ve borrowed and adapted from others. Google is a good example of this. Google built its success on pay-per-click advertising, a model it ‘stole’ from Overture Services Inc, costing Google USD 100 million in fines. Apple is another great example.
6. Show you can sellSelling is the most ignored discipline in the entrepreneurial ecosystem. Very few entrepreneurial programs focus on selling, yet selling is the core of everything. If you can’t sell, you don’t have a business. It would be best to show investors you’re excited to go out and pound the pavement and talk to prospects. You need to get face-to-face with potential customers, understand what motivates them, and learn how to convert them into customers.
7. Focus on creating value, not on making money Too many entrepreneurs approach investors with the attitude of making money, but this focus is wrong. Building a successful company is important; if you do, everyone will be OK. Still, if you focus on making money rather than creating value, you’ll lose motivation if and when times get tough, and your company will be less likely to succeed. Let your focus be on making a dent in the world and making the world a better place, not just on making money. Then if times get tough, you’ll be motivated to find another way to get things done. Investors want to see that you’re committed to something bigger and deeper than just making money.
8. Be intolerant Be intolerant of slips and delays. Be intolerant of sloppiness amongst your team. Be intolerant of investors who don’t get back to you. Be intolerant of team members who don’t live up to their promises. Investors don’t want you to be nice; they want you to be like a dog with a bone and drive the investment process. You have to drive the process, and therefore you have to show a sense of urgency.
9. Turn investors into evangelistsOnce an investor is enthusiastic about you, you have to turn that investor into an evangelist. If an investor says he/she loves what you’re doing but will only invest once there’s enough money around the rest of the table, you need to propose that you go out together and find additional investors to get money on the table. Ask the investor to go out and sell the deal to their friends and ask whom they’d like to have involved.
10. Tell the truth, well Many entrepreneurs are so convinced that their vision will become a reality that they exaggerate and hyperbole. You need to be very careful about this. If you exaggerate, it borders on misrepresentation, which borders on lying, and you don’t want to be caught lying.
You will immediately destroy your credibility if you get caught lying or exaggerating. Also, remember that during an initial meeting with an investor, you don’t have to tell every nitty gritty detail about your company, like how many times you’ve pivoted. Investors don’t want to know you’ve spent the last two years heading in the wrong direction. So during the initial meetings, tell the truth well and then the nitty gritty detail can come later.
When it comes to winning the hearts and minds of investors, perfecting the pitch process is crucial. By following Bill’s advice, you can create a killer pitch; you just need to cultivate a convincing delivery!