Whether you are working with your first investors, or trying to build out the syndicate for your round, once you make a successful pitch to an investor or group of investors, the next step is to reel them in. Coming out of the pitch, most investors will ask to hold a longer more involved meeting to unpack the company's story in greater detail. A lot of investors refer to this kind of meeting as a "deep dive meeting." It is generally considered pre-diligence, not the beginning of the actual due diligence process. In fact, the main point of the meeting from the investor perspective is to decide if they want to do more due diligence. This means the main point of the meeting for you is to convince them they do. So how do you do that?
Deep Dive Basics
From a timing perspective, it's a good idea to try to schedule this meeting quickly, since you want the pitch and the initial excitement fresh in investors' minds. Delay translates to a loss of momentum and may allow investors the opportunity to become distracted by other deals.
Most deep dive meetings are a couple hours long. Time flies when you have a lot of detailed material to talk about, so a shorter timeframe isn't really practical because conversations will be intense and exhausting for everyone.
Deep dives are generally held at an investor site or a neutral location with some conference space, since most start-ups have limited office space, and the meeting would be distracting for the rest of the team.
Deep Dive Prep
Preparation for the deep dive meeting is key, and it will be very different from the prep you did for your pitch. Prepping for a pitch is a matter of rehearsing your presentation to fit within the investors' pitching structure, while a deep dive meeting is much less structured and much less formal. The entrepreneur does not give a sequential walk through of a deck of her own design. Instead, she will mostly be reacting to questions on the fly. No matter what type of agenda the investor or entrepreneur tries to impose on these meetings at the outset, they always devolve into an unstructured Q&A within about 10 minutes.
Contrary to a pitch meeting, you will not be able to hide behind a slide deck or rehearse the flow of what you are going to say because the discussion topics will be random and will jump around a lot. To successfully prep, all you can do is focus on marshaling your facts and supporting materials, and then studying these materials so that you can converse, in depth, on all of the key topics you expect investors to ask about. Having lots of "appendix" types of slides and a detailed financial model on hand in case you need to refer to them is great. However, I repeat: you will not be giving a pitch. The slides will only be there to help illustrate the key points you are making and to demonstrate that you have thought about and analyzed the key issues. I have seen as many deep dives that do not refer to any slides as ones that use a lot of slides.
Preparing to Hit Your Main Points
Time really flies when prospective investors get going and riff off of each other's questions. Don't be surprised when multiple threads open at once and what feels like chaos ensues. It will be easier to respond to the chaotic situation if you remember this fact: the reality is there are really just a small number of key issues that need to be resolved in an investors mind. From my experience, the most common are:
- Questions around the team: why you, why now?
- Questions around the market and the competition: are there enough customers with this pain?
- Questions around the solution: is this 10X better, faster or cheaper?
- Questions around the plan and the finances: what is it going to take to get this to profitable growth?
During your deep dive meeting prep, you will need to consider these and other specific issues you think will be important to your prospective investors. Once you have a short list, consider the two or three key points on each of those key issues that must be made. If you are able to deliver forcefully three key points on each of the key topics, you will be prepared to have a successful meeting.
It's More Than Facts & Figures
Keep in mind that these meetings are also as much about getting to know you as they are about walking through the details. So for all the prep, it is still important to be yourself and be comfortable. Get a good nights sleep. Show up early to settle into the room. Wear comfortable business - appropriate clothes. And come prepared with the mindset of looking forward to having a great back and forth discussion about the team, the company and why you are passionate about the opportunity.
With your deep dive meeting preparation complete, it's now time to think about what we will cover next in this series: How to navigate the actual meeting to a successful conclusion while avoiding falling into a death spiral.