How to Win Over Potential Investors
That first meeting with a potential investor can be intimidating, nerve-wracking even. The lifeline of your business—this idea that you’ve nurtured from the very beginning with the hope that it develops into a successful venture—is at stake. The temptation is to be über-prepared, arriving with your business plan and all the pertinent facts and figures in tow. And this is a good idea. It’s a great idea, actually, because this is the thing that investors will look at to make sure that you’re serious, to confirm that you’ve really thought things through. It also tells them how much money they stand to make, which is something investors like to read about.
As important as that business plan is—and I cannot stress enough how important it is—it’s not everything. It’s not the one document that’s going to earn you that seed funding you’re looking for. To do that, you really have to impress your investors. You’ve got to make your mark, an indelible one on their collective memory that gets them excited about what you’re doing. There are two key things you need to remember, each just as important as your business plan.
Make a big impression
There’s a well-known legend about Ozzy Osbourne from back in 1981, fresh off his departure from Black Sabbath. His debut solo album, Blizzard of Ozz, had been released in the UK and wasn’t doing as well as everyone had hoped. His record label, EMI, seemed nervous about sinking any money into promoting the record’s upcoming U.S. release. In order to convince the label to take Ozzy more seriously, he was encouraged to make an appearance at their annual sales convention. Osbourne ended up giving a speech at the convention, and as a “peace offering” was to release two white doves out into the audience. Instead, he pulled them from their cages one by one, and bit their heads off.
People were horrified, but no one can deny he made an impression. It was also exactly the kind of press he needed to jump start the solo career, and we all know how that turned out.
Now, I’m not suggesting you decapitate live animals in a board room to wow your investors—in fact, I adamantly urge you not to do that. It’s bad for your business, and much worse for the animals. But the lesson of this instructive: You need to stand out somehow. Investors spend almost all day, nearly every day, hearing pitches from people who think they have the Next Big Thing. Listening to these pitches is their routine, so your pitch needs to be anything but.
I remember our investors telling us about a memorable pitch they received from a company that made musical instruments and amplifiers. Before they got down to business with their PowerPoint Slides, with graphs and data and all that stuff the money folks want to see, they set up some guitars and amplifiers, which I’m told were cranked up to 11. I cannot confirm that number as the actual volume, and I suspect someone had watched This is Spinal Tap quite a few times before telling this story.
The point is, they made it LOUD, and then blew the room away with an impromptu rendition of Deep Purple’s Smoke on the Water. Seeing the product in action had the effect of making the slide deck that much more effective.
Unfortunately, nobody in our company can play the guitar all that well. Fortunately for us, we didn’t need to. We don’t do anything involving music, and probably would have looked more than a little daft. AppInstitute is a DIY platform for business to build apps, and so that’s what we did. In our pitch meeting, and in under a minute, we put together a fully functioning mobile app and had the investors using it on their phones. That impressed them, and was essential in holding their attention for the rest of the pitch.
Sell yourself as much as your business
Especially when you’re small, you are your business. Investors aren’t going to want to just like your business model. They’ll need to like you. Well, “like” is a strong word, but they definitely need to feel comfortable with you. It’s not enough to be polite and witty and charm them. If you can forge a personal connection with any one of them, you’re a step ahead of the game. By personal connection, I’m not necessarily suggesting it needs to be anything too deep. It’s definitely a binding experience when two people share interests and beliefs, but that’s not productive for securing financing.
I’m speaking more specifically about getting them to understand your backstory, not just your company’s, and what your motivations and passions are that led you to create a business that needs funding. You should also take the time to understand your potential investors’ existing portfolios and see how you fit in with their past funding. There should be a natural reason why you’re seeking money from this particular group. For my company, our story and connection made all the sense in the world. We received funding from a firm called the Foresight Group, and they were using money from the city of Nottingham’s Regional Growth Fund. I was born and raised in Nottingham, started my business here, and don’t intend to uproot to go anywhere else. The bulk of our geographic expansion will happen over the cloud, and not from the opening of tiny offices all over Europe and the U.S. So, when they funded us, they were funding jobs and economic growth in Nottingham. It’s pretty hard to argue with that.
Incidentally, if you research your investors, see their past ventures, and can’t come up with a good reason why you’re a natural fit for them, chances are that pitch meeting isn’t going to go well. Be prepared to be honest that you don’t see how you complement their current ventures, but look forward to helping them branch out in new directions. Then be further prepared to describe what those directions are. The worst they can say is No. But it will also help you refine your pitches in the future, as well as to hone your search down to more appropriate firms that play in your vertical.
It’s not an exact science, and no one said it would be easy. But you’ll get better and better each time you repeat the pitch. You’ll understand better how to make that big first impression while setting your sights on the kinds of firms who will be impressed. Just remember: rejection is something you need to get used to. Persistence is something you’ll need to possess in surplus. For the life of the entrepreneur, life’s a pitch but you keep on trying.
Ian Naylor is the founder and CEO of AppInstitute, one of the world’s leading DIY App Builders (over 70,000 apps built). Naylor has founded, grown and sold 4 successful internet and technology companies during the past 18 years around the world. He gives seminars as an expert authority on startup mobile app trends, development, and online marketing and has spoken at numerous industry events including The Great British Business Show, Venturefest, the National Achievers Congress and numerous industry exhibitions around the UK. AppInstitute regularly provides leading publications with app analytics, business data, case studies, white papers and statistics for established publishers across the world. They were named in the top 50 creative companies in England by Creative England.
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