Have you ever looked at your pitch deck from an investor's point of view? Take everything you have in your bank account, all your cash, assets and everything you own, write down their value and then sum it up. You may have just 100 dollars, euros or whatever your currency is or you may have 50,000 or 1,000,000. Write it on a piece of paper. A cheque to “Your Name” for XX, the total sum of your money.
Have you done it? Now, think about your product/solution and see how you can relate to the following questions. Answer them as if you are an investor.
A) Will you risk that hard-earned cash on a project that seems to go against the flow? Don’t be put off by this. This is what all of us entrepreneurs are doing. I want to bring your awareness to the risks. Many VCs have bet against disrupting the market.
All you need to do is explain it well. However, your explanation needs to be so convincing that you should show that you will bet your own money on it. If you can convince yourself, you are 99% there. Because if no one else does, you have the cheque you wrote to yourself, if you are fully convinced then you know you will make it and your risks are low and the reward high.
Do you understand what he is telling you about the risk now? The less likely you are willing to put your money, the less likely the investor will be. It is a matter of eliminating those reasons that go against you.
B) Will you invest in a product that for the moment has no use or client but one day may have use? Is there data to support this future use and if so, what are the expected numbers and results? How long are you as an investor willing to wait to get your money back? Put simply, how long will an investor have to wait to get their return on investment? 2, 5, or 10 years?
Every investor has a different window frame. It depends on many factors and their age is one of them. You must be clear as to whom you are pitching and what their window is for Return On Investment (ROI). Short-term ROI of 2 to 5 years suits most Business Angels and most will be willing to sit it out, while 10 years is rather far-stretched and not for all.
Will someone in their 70s think of a 10-year investment? However, for someone in their 20s, 30s or 40s, a 10-year wait might not seem unreasonably long, and for VCs, it is roughly the basic expectation.
In his endeavour of fundraising, he approached many people in his network, many of whom were wealthy and High Net Worth Individuals (HNWI), however, he has a 10-year vision and most of these HNWIs were in their 60s to70s with an ROI window of 3 to 5 years. They could sit back, enjoy life and not worry about money until the day they died. Why would they want to wait 10 years before seeing any ROI? The only reason they would gamble on my MISSION would be if they could get a quick return.
C) Is your investor interested in aligning with your vision? YOUR MISSION, your objective must resonate with your audience. You have X amount of money at your disposal now. Let’s say you were presented with 10 golden opportunities, of which 2 are in the sector of your expertise, 5 the projects you can’t even understand and 3 of them you find boring even though they are profitable.
Where would you place your eggs? Most people are looking for a safe, high return and sometimes something that can turn them into the HERO. Your story, your mission, and your cause must resonate with them. You will not invest in gold, simply because gold is giving the best return. You may invest some in gold but our human nature is such that we are often looking for an adventure. An adventure that can bring excitement to our lives, but one that will provide us with enough safety.
As humans, we are first and foremost risk-averse. We have an affection to loss aversion. We will go to great lengths in order to avoid loss. Tackle this important point about minimising loss. If you can convince yourself then you have your own first investor. Others will follow if you plan it right. Deliver a credible story and separate boxes of information so that they become easy to digest and visualize in the mind. Your story should be continuous and interconnected as if you were solving an algebraic formula information.
You will need to prove demand with a possible expression of desire from the market. You are providing a solution for a problem that affects thousands or millions of users per day and yet no one has bothered to fix it so far. If the solution is that useful, then you need to have traction. Explain your user acquisition strategy in depth with real numbers and back them up with tested marketing campaigns.
Remove the risk in simple presentations in order to allow your investors to open up to the opportunity. He has helped entrepreneurs fix their pitch deck and financial plan, in order to close their fundraising. If you want to learn more, visit his website.
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