Are you looking to attract investors? Do you need to find funding for your killer idea that will propel your business or project into the next billion-dollar startup? If you are, you’d better not be flying solo. According to CrowdfundX CEO Darren Marble, the most important ingredient for attracting investors is your team… along with the perfect pitch.
As a UCLA college dropout, Marble had no background in capital markets, banking, or marketing, yet found success as the founder of a company that’s marketed historic Regulation A+ IPOs to NASDAQ, NYSE, and OTC Markets Group.
He’s heard thousands of pitches along the way and assessed all types of projects to work with. So, I figured I’d tap him for advice on what makes the moneymakers get their checkbooks out and what it really takes to attract investors. Check it out:
What Do Investors Look for When Deciding to Fund an Idea?
“A strong team with a compelling product or service, with some unique differentiation from their competitors,” Marble says. “Your team is more important than anything else. Ultimately, investors are asking themselves, “Can this team really pull this off? Do they really have the collective skill sets and resilience to succeed?” If investors lack confidence in your team, they won’t invest, period.
Having tech is great–in fact, it’s a huge advantage–and you certainly need passion as an entrepreneur. But if your core team has gaps, you’re in trouble.
That’s why choosing the right business partners early on is so important. It will likely make or break your company, so choose wisely. Don’t rush into partnerships too quickly. Lastly, you need a proper founder’s agreement, which generally means four years vesting with a one year cliff.”
What Key Elements Does the Perfect Pitch Need?
“The perfect pitch has a strong emotional hook and is backed by the opportunity of tremendous financial reward for the investor. What this means is that your company needs be solving a critical problem in a large market–it can’t be a niche play, or investors generally won’t be interested.
The perfect pitch will sell your vision, mission, and values. Those are things that inspire investors if told right. You shouldn’t be selling the “what,” but rather, the “why.” Why do you do what you do? What’s the driving force behind your company? If you can articulate this clearly and simply, you can effectively inspire investors.
Once you have them hooked, you need to deliver the knockout with the promise of potential returns. How big can your company actually be in success? Truthfully, you should be aiming to build a billion-dollar business–it will excite your investors, and it should excite you, too.
How Long Should the Perfect Pitch Be?
“Generally speaking, less is more. You want to lure in investors by whetting their appetite with a short but compelling pitch and get them to ask you to provide more information.
Go to Apple’s website and see how they advertise their products. Look at Apple AirPods, for instance: they’re marketed as “Wireless. Effortless. Magical.” That’s it. Just three words. It draws you in. That’s what you want your pitch to do–to draw investors in.
You should have a clean pitch for email, and also memorize a 15-second, 30-second, and 60-second verbal pitch. Use your best discretion as to which pitch you use in different circumstances. Ultimately, less is more.
How Should You Pitch? What Comes First? Is There an Order?
“Over email, I would generally start with a few sentences outlining the vision, problem, solution, and market size, and include a link to a ten slide deck. Again, your goal is to make the investor ask for more.
Behind the deck, you should have the following documents prepared and ready to send when asked: a white paper (if you’re in digital securities or cryptocurrency), a 5-year pro forma with use of funds, a pro forma cap table, a term sheet for your round, and all of your company incorporation documents including founder’s agreements.
A common mistake is to send all of these documents at once. A better approach is to think of your dialogue with investors as a drip campaign: start with a simple email and deck, and make them beg for more.”
Is This Something You Can Learn? Can You Train Yourself to Attract Investors?
“You can absolutely learn to pitch investors. Practice with your family, then your friends, then a mentor or advisor. Once you’re comfortable and confident, start pitching small investors, and work your way up the food chain from there.
It’s ok to be shy as long as you learn how to pitch an emotional hook and the opportunity for a financial return. To be sure, being charismatic isn’t a surefire strategy to winning investors, either. If you’re over the top or too aggressive, you can turn off investors quickly.
More than anything else, you need to be authentic, transparent, inspiring, and you need to know your numbers (market size, financials, projections, etc.). If you can master these four pieces, you can raise money.
Before you start pitching investors, you need to ask yourself, “Is my business solving a real problem?” Most businesses fail because their product or service doesn’t deliver real value. Entrepreneurs need to audit themselves and really dig deep to ensure they are not going down a bad path. Once you’re certain that you’re solving a real problem, keep your pitch to investors simple.”
Anything Else You Would Like to Add?
My best advice for an aspiring entrepreneur is this: never give up. Being an entrepreneur isn’t easy. The odds are always against you. Success feels impossible. It will make you question everything. You will find your rock bottom. But sometimes, the moment you’re closest to failing completely is actually the moment you’re closest to breaking through.
It’s possible to succeed through sheer will and perseverance. It helps to have talent, and you can also get lucky with timing. But based on my own journey, my philosophy for success is simple: resilience above all.”
Featured image from Shutterstock.