What Investors are REALLY Listening For
Keep these three things in mind when preparing your next pitch.
Today’s guest post is by Donna Griffit, author of Sticking To My Story: The Alchemy Of Storytelling For Startups (CLICK HERE to get your copy).
Startups spend A LOT of time tweaking their pitch, their numbers, and (they should be tweaking) their story before meeting investors. Often, though, they miss out on a huge opportunity – how to speak to what investors really listen for.
Humans process information in steps – it goes through our mind by various questions popping up, seeking answers; then it starts traveling to our heart; and finally, our gut – which is where we truly make decisions. It would seem that the “top of mind” questions are the most important part to address with investors. That’s true – but we can’t ignore the other parts as well.
In my experience, there are three things investors really listen for throughout the entire pitch. And if you can point to at least one of these on each slide – you will be creating an entirely different dimension of communication. In my new book, Sticking To My Story: The Alchemy Of Storytelling For Startups, I detail how to prepare each and every aspect of an investor pitch. I want to give you a peek into these three very important things:
Credibility – This is where your numbers and preparation come into play. You must be able to prove beyond a shadow of a doubt that you know what you’re talking about, you are an industry expert (even if you didn’t start off in your industry) with the numbers, the credentials and the evidence to back up your words.
Also, credibility is proven through your stellar team, who should be experts with unique knowledge and experience in their domain and preferably some in your startup’s industry as well. Highlight their unique skills, talents and experience that give your startup an “unfair advantage” over your competitors.
This can also help answer the question I often am asked: Where to put your Team slide. Beginning? End? Somewhere in the middle?
Ask yourself if your team adds to your credibility. Do you have serial entrepreneurs with exits under their belts? Former C-Levels from well known companies who have now joined you? Recognizable names or industry leaders on your Advisory Board? If you answered yes to any of these, definitely put the Team slide at the front. And make sure to add logos of big companies they’ve worked with or organizations they’ve been affiliated with.
If you just happen to be a nice group of scrappy, hard working, first-time entrepreneurs (not that there’s anything wrong with that!), wait til a bit later when you have grabbed their attention with your fabulous pitch.
This is not the place for false modesty – you and your teams’ accomplishments are one of the biggest assets you have as a startup – so be ready to showcase them.
Likeability – Investors aren’t just scrutinizing your company; they are scrutinizing you. They want to see that you are “mensches” – meaning good people with strong integrity. They want to know that you are people they can work with. It’s not being a yes-person; it’s showing that you are coachable and have a flexible mindset, that you won’t fight them on every suggestion or criticism that they have. They aren’t there just to write a check, they want to be able to bring value to your company in other ways – and if you aren’t open to that, it will deter them from investing.
Remember, you’re going to spend many years together, through thick and thin, sickness and health – for better and for worse – and if this sounds a bit like a marriage, you’re right! You are in a committed relationship with them for a period of time that very well might last longer and have a better outcome than many marriages today!
How do you show likeability? Is there a slide for that? A VC once told me that he sees so many good companies that he started looking for reasons to say “no” rather than “yes”. And it can be one of the seemingly most benign reasons – like a founder glancing at their phone during a meeting. This was a red flag for him, and a strikeout for the company. Sounds a bit extreme? Maybe – but they view your behavior during a meeting as a sneak peek into how you will interact with them in the future – and they should take precedence over phones.
So be present, listen more than you speak, answer questions, take notes! (Actual written notes on a pad and paper, not on your phone or computer – this shows active listening.) And please – do not argue with them! It’s ok to disagree, but arguing will definitely put you on the no list.
Momentum – This is the “rubber meets the road” moment. Investors look for winners. You need to prove that you are on a winning trajectory, scaling to new heights and they have a once in a lifetime opportunity to join your company at this stage.
This is where numbers come into play: Growth in users, in revenues, strong partnerships, an impressive pipeline, loving testimonials from users, IP or regulatory process – anything that proves you are a solution that people want and are willing to pay for or be part of. This can be shown early on in a “Brag Slide” – where you showcase your biggest and most impressive numbers if you have them, or later on in a “Traction Slide” – where you simply show your accomplishments and the phase that you’re at in product, projections, pipeline, partners and more.
If you constantly keep Credibility, Likeability and Momentum in mind and in play as you are pitching, you will definitely increase your chances to raise funding, or at the very least, forge a relationship with an investor who might come on board when you’re a bit further along.
Donna Griffit, author of STICKING TO MY STORY: The Alchemy Of Storytelling For Startups, is a world-renowned Corporate Storyteller and Pitch Alchemist. She has helped over 1000 startups, corporates and investors raise over one billion dollars and accelerate their sales with a personal touch and unmatched messaging savvy, in any industry, at any phase. For more information, please visit www.DonnaGriffit.com
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