Raising capital can be a long and arduous experience. Perhaps the most counterproductive feeling is wasting time with investors that don't end up investing in you, or take too long to make a decision. Having raised $10 million by completing hundreds of investor calls and meetings, I've learned that if you don't structure calls correctly, you'll waste precious time that could be spent on other important responsibilities; or worse, you may not close your round fast enough to keep your company alive.
First, here's what you don't want to do: spend 90% of your call describing your company and then run out of time to clarify if and how a deal will get done. Instead, the best structure for a 30-minute call is:
- 10 minutes of discovery (build a rapport and ask the investor questions)
- 10 minutes talking about your company and the financing
- 5 minutes of the investor asking questions about your company
- 5 minutes of you clarifying and driving the decision-making process
Before diving into your pitch, ask as many questions as you can to investors to discern their probability of investment, and how you can increase that probability. Remember, "If you're listening, you're selling." Ask questions about their investment criteria, check size, deal frequency, and what they look for in companies and founders. You can then tailor your pitch based on their answers.
When describing your company, focus on what investors care about, not what founders care about. Investors care about market size, growth rates, valuation, future financing, defensibility, market trends, and team. Founders often overemphasize product features and benefits, as well as marketing.
When answering investor questions, keep your responses brief. Investors will typically have three to five questions, which means your responses should each be 30 to 90 seconds long. You want to have plenty of time at the end of the call to discuss next steps and drive the process forward.
Finally, end the call by getting a commitment from the investor. Ask them point blank if they plan to invest. If the answer is no, thank them for their time. If the answer is yes, outline next steps and get another commitment. For example, "I'll send you the documents and wire instructions today. Can you sign them and wire the money tomorrow?"
Most likely, investors will need time to think about investing. If this is the case, ask about their process. Who's involved? When will the decision makers meet? What other information do they need? When will they give you an answer? What you're doing in the last five minutes of a call is limiting the variables that will change their "maybe" to a "no". As time goes on, they will get less excited and more distracted, so you want to guide the process to get a final answer as quickly as possible.