Startup funding: How to make investors love you
It’s all well and good having a great pitch. We talk a lot on this blog about how to blow investors socks off with your pitch deck – after all, it’s what we’re great at. But while having a great deck is fundamental to your success it’s just part of your journey to securing startup funding.
1. Show them the real you
Investors invest in people, not businesses. With the right fundraising assets, you’ll be able to demonstrate you’re an investable entrepreneur. But it’s also important that you get across your personality when you pitch. They need to like you as much as they trust you. As tempting as it is, stay away from heavily scripted pitches. Instead, treat each point on each slide of your presentation deck as a prompt, and expand on that point without notes. After all, it’s your business, you know this stuff inside out. By keeping away from notes, you’ll become much less robotic and come across much more naturally, giving investors a glimpse of the real you.
Additionally, when in boardroom meetings, it’s important to be authentic and honest with potential investors. If you’ve had failures in the past be upfront about them. You may have made a mistake early on in the business that cost you big time. The most important thing here is to demonstrate how you quickly learned from these mistakes and rectified them, putting your business into an even stronger position. Investors know you’re not perfect. No one is. Do you think the investor sitting opposite has backed a winner every single time? Of course, they haven’t, sometimes they’ve made a mistake. Rather than have the investors dig around for the dirt, be upfront about it, own it, and make it clear that you’re great at learning and adapting to change.
2. Practice makes perfect
Your pitch looks and sounds great. It’s clear, concise and memorable. But if you stand there in front of investors awkwardly looking at your feet with a noticeable quiver in your voice – you’re not going to inspire confidence in your ability to inspire others to join you on your mission.
So, you’ll need to practice your pitch. You’ll need to practice it lots. This doesn’t include pitching in front of the mirror. Nor does it include pitching to friends and colleagues for that matter. Doing so is a waste of time and doesn’t simulate the real environment. Instead, attend pitching competitions, arrange your own events with your network, pull together people you don’t know from your accelerator or office space and spend some time pitching to each other. Do whatever it takes but practice your pitch hundreds of times before you even start at the bottom of your target list.
Martin Luther King is said to have given his “I Have a Dream” speech over 1,000 times in churches up and down the USA, before his famous TV broadcast. I very much doubt his first ever recital was anywhere near as impactful as his historic moment in front of millions around the world.
3. Treat investors as equals
It’s easy for a founder to put investors on a pedestal and treat them as if they are some kind of higher being. After all, they have something you really, really want – large sums of money. And without them, your dream is dead. Or, at the very least, it will be much slower and harder to achieve it. However, you must remember that they’re just normal people, wanting to back an exciting entrepreneur and enjoy the successes it brings.
By treating an investor as an equal – another business mind as brilliant as yours – you don’t bring them down, you elevate yourself up. You’ll find yourself in a more influential position and lay the groundwork for building a real relationship. Remember, you have something they want. High returns on their capital. And only you can deliver them this.
By approaching talks as an equal you actually come across more likeable and more business-like. It subconsciously tells the investor that you’re confident in your business plan and your idea, and that they’re lucky to have the opportunity to invest in you – rather than the other way around. It’s important to get the balance right though, push it too far and you’ll not be seen in the investors’ eyes as an equal, rather you’ll be seen as arrogant and un-investable.
4. Get out there
When it comes to raising investment, building relationships is key. Of the founders I’ve worked with, it’s always those that are pro-active networkers that have the biggest successes. They attended as many events as they can, they go to pitch events, meetups and build a community on social media – and they’ve been doing this long before they had a fully prepared business plan or had completed their pitch.
These founders don’t attend events in the hope of finding someone who’ll invest in their business. Instead, they’re slowly building up their network in the entrepreneurial, startup and investment scene so that when the time comes to launch their investment campaign, they’ve got a network they can leverage for warm introductions to their target list.
By building relationships with the mindset of “finding people who may be able to help me” rather than the mindset of “finding someone to invest in me” you don’t come across as needy or desperate (trust me, investors meet more than enough of these founders). Instead, you’re much more approachable, relaxed and genuine. It’s amazing how many doors this will open. What’s more, when you’re not looking for investors, you’ll almost certainly meet them.
Start networking now. Search Eventbrite and Meetup for some interesting events near you. Ask others at those events if they know of any other good ones and start getting yourself out there. Begin building your online community and social network. It will be worth the effort once you’re ready to launch your investment campaign.
5. Build a tribe of investors
This one is my favourite tactic. I’ve saved the best until last. It’s the culmination of everything we’ve talked about so far. It builds excitement and creates a desire to invest in you and your business.
If you’ve taken on board the previous four tactics, you’ll be a proactive networker, with a confident and natural pitch, who comes across as genuine and authentic. You’ll have built a network of fans who are keen to help you and have begun building relationships with investors.
As you maintain these relationships over time, you should be keeping your network up to date with your progress. This may be when you meet them again at the regular events you’re attending, or via an active social media strategy. Either way, your goal is to tell them of your successes and failures. Your goal is to be authentic; this means you have ups and downs. By also sharing the low points (along with how you overcame these obstacles) you’ll only add to your credibility. As you build deeper relationships you can begin to drop into the conversation that you’ll be opening an investment round soon.
Before long, you’ll have a queue of investors asking to be notified of when you open your round. Pick a date in the future that gives you enough time to build a decent waiting list. While they’re waiting, send them a teaser pitch, telling them that you’re putting the finishing touches for the full investor deck, business plan and financial projections.
Providing your teaser pitch lives up to the hype you’ve created, they’ll be desperate to see the full investor deck and book a meeting with you to discuss the investment opportunity in more detail. As soon as you launch your campaign you’ll be able to line up a number of meetings and pitch events in quick succession and rapidly close your round.
It’s this tactic that led to one of our clients Prosper BI, closing their round and being offered nearly 50% more than they were asking for in just one pitch.
If you take just one thing away from this post, it should be that investors are human, they make decisions based on both fact and emotion – just like the rest of us. Every startup can provide an investor with the relevant facts. The ones that succeed are the ones that make investors feel a certain way about them and their business.