I recently listened to a management team practicing their money-raising pitch. The pitch was well-honed and hit all the right notes. The management team was adept at looking at their business from the outside, assessing its strengths and weaknesses, and outlining how they would use the money. They deftly raised questions that an investor would ask, then showed how those concerns weren’t real or could be mitigated. They were well-spoken and knew the key financial drivers in their industry. The company was growing, and was on a path to even greater profitability.
But it was at the very end of the pitch where they really hit a home run. The CEO thanked the potential investors and proposed some next steps to help the funders get to know the company better. Then she then asked for questions―and waited.
When you go out to raise money for your company, there’s a special skill in knowing when to “call the question.” This CEO had it. She knew that the folks on the other side of the table needed to get to know her company, and she understood that asking point-blank for capital at the end of that meeting didn’t make sense. She also understood that investors have their own processes to go through, and that they don’t make funding decisions in an instant.
The CEO also knew something else: Her goal, in this meeting, would not be to get a check. It would be to get to the next meeting.
Asking for something too early isn’t likely to be nearly as successful as building trust and comfort. In many aspects of our lives, the quick “ask and answer” does make sense. The raw speed of technology only encourages our desire for instant decisions. But signing up to invest in a company for three to seven years is not done quickly.
How do you increase your chances of getting to the next meeting?
Presentation alone doesn’t raise capital. Putting on someone else’s persona doesn’t work either. But presenting well and creating a process to move things along does increase your odds. If you are successful in consistently getting to the next meeting, you will eventually get to the money.