Even with the right strategy, even beyond developing a compelling “pitch deck”, raising capital is a time-consuming process, usually covering several months, and complicated by many difficult decisions, each often with huge implications to your business’ and personal success.
Communicating your story effectively, finding and pitching the right investor prospects, responding to due diligence inquiries, negotiating win-win deal terms and even and pulling undecided prospects over the line to commitment will require significant attention to detail and varying levels of both skill and time. Beyond being enormously time-consuming, it likely will also be quite stressful, requiring numerous types of on-the-spot decisions well beyond which term sheet to accept and under what terms. For example, often tough but critical decisions will need to be made around, to various degrees, the level of information you reveal, to whom, by whom and when, at least somewhat based on your intuition of how serious the investor is and to what degree they can use the information you give to hurt you with other investors, competitors and/or current and or prospective customers. I can support you with the experience you need so that you have more time to focus on building your business. As indicated above, I have reviewed thousands of business plans, decks and executive summaries in my career. I have also heard the questions and concerns expressed by a variety of investors after those presentations. My portfolio companies raised $350+MM and I was able to observe the challenges and solutions they faced before and after closing on the deal.
Depending on your needs, I can serve as your part-time CFO, a task specific one-time engagement, such as developing your pitch deck or an on-going coach/ consultant throughout this process. Let’s chat to discuss how I can best meet your needs.
COMMUNICATING THE STORY EFFECTIVELY
The pitch deck is just one of the formats you will use during the fundraising process and each needs to clearly and confidently communicate your Company’s current situation and how it will blossom into your vision, ideally told with just the right balance of facts, hopes, logical, albeit sufficiently optimistic extrapolations, humility, passion, and more.
Creating a compelling story is obviously critical to raising capital. This is generally much more challenging and time-consuming than you expect it will be for several reasons:
1The story needs to be equally strong in verbal, presentation and text formats, and often in multiple lengths: the “elevator” pitch, the timed pitch deck in front of large audiences (and there is no one standard length if you present at multiple events), the 1-1 pitch deck where you will have more time, the emailed pitch deck where you are not immediately able to augment the slides with verbal explanation, and the Executive Summary narrative in various formats (ie. Ben Franklin and Gust), to name just a few.
2Particularly if you are a tech company, the business evolves every day and thus, your story should keep pace—in each format.
3As you tell the story, you will continue to learn what resonates with investors and/or which questions you keep answering that obviously isn’t being answered effectively initially.
4There is no end to philosophies and opinions for how to best tell your story—and depending on the day and source, you will need to weigh whether to implement the advice. Typically, a change in one part of the story will impact how or the order you communicate another part of the story.
5The amount of practice time required to become comfortable enough with the exact words you want to confidently communicate the story will clearly depend some on your own public speaking skills, but even if you trust yourself to “wing it”, some will be needed even if just to make sure you finish in the allotted time. As your presentation evolves, additional practice will generally be required. Often entrepreneurs find it useful to practice answers to expected questions.
If you haven’t read how I view the importance of a Funding strategy that syncs with the business’ growth strategy, understand that it is rare that when asked to do a pitch deck that I’m not going to ask numerous probing questions to verify the story you are asking me to help you tell is indeed the story likely to resonate with investors. This is one way that I think I am quite differentiated from some of the other service providers and mentors in the market that assist with decks. However, as there is no one best way to tell your story, and we each have our own styles, you might find it valuable to use me to work with you on the strategy piece and someone else to subsequently work on the deck.
DEVELOPING YOUR TARGET LIST AND GAINING ACCESS
Once you’ve identified the type of funding resource, then it’s time to determine which specific ones to target first, develop a plan for how to get access and then determine the appropriate approach to get the appointment. While submitting your deck or letter of intro occasionally works, warm introduction is far more effective. Obviously, team members and advisors with a broad network are important. Determining which events to attend or present to and how to maximize the effectiveness of those opportunities is as well. Regardless of how you gain access, you still will need to have the right approach.
Generally, you will speak to many potential funding sources when raising capital, and those interested, will take many different approaches to negotiations. For larger deals, and sometimes even smaller ones, getting a lead investor who sets the terms that other interested investors will use is the most difficult challenge. It takes significant negotiating skill to keep multiple options open and competing to invest in your business. However, there may also be times where you want to bring two smaller investors together so that they know that should they want to move forward, there will be others there to share the risk with them. The valuation is only one important term and understanding during verbal conversations the potential impact of the various terms being discussed can dramatically improve the terms you eventually see in the term sheet. Even if your attorneys later give you the advice to push back on terms, at the very least it can extend the time to close, but worse, it can create bad blood that can nix the deal.
Another challenging part of the negotiating process is getting enough of the investor prospects that expressed interest in participating once you found your lead investor, to turn this interest into hard commitments. Frequently, investors want to keep their options open and thus indicate more interest than they actually have so that they still have the opportunity to invest if your business prospects improve or you attract a high-profile investor. Determining who is seriously interested and who isn’t is part of what is described as the challenge of “herding cats”, first to get commitments, and then to review and sign the final deal documents.
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