7 Keys to Unlock Your Power Pitch
The ability to raise money is one of the most important skills successful entrepreneurs have. It’s nearly impossible to take your business where it needs to go without the resources required to get it there. It’s especially difficult when well established, cash packed companies are out there trying to stop you from snagging their market share.
Back in 2005, when I set out to raise money, for the first time, for Waitrainer, I failed miserably and repeatedly. It took years of no’s for me to figure out the formula. I eventually got it and, today, I’m going to share it with you. But before I do, you may want listen to my business podcast titled: “So You Wanna Raise Money?” There, I take a deeper dive on the subject and get pretty detailed on all the steps you need to take to be in a position to raise that first Angel funding round. This supporting article is focused on pitching your business.
So here goes the 7 keys to unlock your Power Pitch
- You’re the number 1 sales person
Your primary role as an entrepreneur, and forever will be, is to sell your ideas to everyone, everywhere, 24 hours a day, 7 days a week and 12 months a year. You will always be the number 1 salesperson, otherwise you won’t have a business very long.
Key #2 – Be yourself
Carrying a façade is a sign of insecurity and weakness. But, most detrimentally, it creates mistrust. First time entrepreneurs often do this (at least in my case) because they are, in fact, insecure. Angel investors won’t invest unless they like and believe in you. So be you, even if you’re new to fundraising. Admit your lack of experience, but don’t let that get in the way of your confidence. Trust me, you’ll do just fine as you. When insecurity or fear crops up, just remind yourself that you’re right where you’re supposed to be.
Key #3 - Get as far as you can without raising money
Don’t be lazy and go for the quick fix money. Instead use your brain, get creative and prove your resourcefulness. Structure your business idea by documenting it. Tap your friends and family for seed funds, establish a great brand strategy, use the tools Uncle Sam gave you (LLC, S-Corp, C-Corp, etc.) to form “currency” (stock), build a perception of value to others and use equity to bring in the partners that can actualize your concepts. Investors don’t like wasting money on things that can be accomplished without money.
Key #4 – Know your shit
One of my favorite mentors of all time, Sean Beers, used to say “know your shit!” He would write it on the walls in the office and drill me over and over about numbers, margins, costs, etc. so that I could rail them off the top of my head to any investor that came my way. When you’re growing a business there’s certain things you just have to know, in real time, all the time. The same goes for pitching at the beginning. Do your homework, know your business and be well prepared. Here’s the tools you’ll need so that you’ll know your shit:
Key #5 – Keep it simple
- Business plan
- Executive summary
- Investor deck
- Business model with Forecasting
All the information supporting the arrival at your conclusion is just noise when it comes to pitching your business. If you want to raise money, don’t include this crap. Most of it is confusing to outsiders anyway and confusion makes investors (as well as potential customers, vendors and partners) walk. Investors write checks to businesses they understand. Furthermore, too much information (TMI, as they say) indicates lack of mastery over a subject. It take a lot of work and thought to devise a clear concise and effective pitch. Keep your pitch clear, simple and streamlined limited to just the important information. This goes for your business plan, deck and everything else you say and write that pitches your business. Accomplishing this is much easier said than done. But, like I always say, if simple were easy, everyone would be doing it.
Key #6 – Be ready to take the money
Raising money (and sales in general) is a multi-phase process. Pitching is phase one. Your pitch objective is to spark interest. Interest leads to questions, questions lead to due diligence and objections. Due diligence and objections lead to negotiation and negotiation leads to money in the bank. Have a due diligence file, on the ready, which includes everything and anything an investor might want to see so that you can take them through the process and land at the end goal:
Key #7 – Mastering the power pitch takes tenacity
- Everything noted in Key #4
- IP documents, operating agreements, legal documents, etc.
- Product designs, service structure, brand assets, etc.
- Term sheets (the investment terms you’re asking for), valuations, etc.
- Capitalization tables, active contracts, partnership agreements, purchase orders
- Get the point?
Get ready to have your feelings hurt because you’re going to get a lot of no’s. That’s a good thing. Why? Because if you’re getting in front of investors you’ve overcome the first hurdle: getting in front of investors. Mastering the power pitch takes lots of pitching and adjusting. Pitch and adjust. Pitch and adjust. So on and so on… Every time you lose an investor (or a customer / whoever it is), is an opportunity to learn. Remember, at the beginning, I told you how hard it was for me to raise money for the first time? Well, now I raise money quickly and easily. I still get no’s from time to time, but I have a network of investors that work with me again and again. Who I know, what I know and my capabilities to rally resources today, is a result of one simple decision: I never gave up.