And your pitch deck isn’t as important as you think…
Usually, when anonymous startup gurus (like me) give advice about pitching investors (like you’re about to read), we all seem to agree on one basic premise: your fundraising pitch is the thing you do once you’re in front of investors. It may or may not be in-person. It may or may not require slides. And it may or may not end in some sort of opportunity to get money. But, gosh-darnit, it includes talking with an investor.
What if that’s not actually true? What if one of the reasons you’re struggling to raise capital is that, whether you realize it or not, your fundraising pitch actually starts much earlier?
Toward the beginning of my startup career, I scheduled a meeting with a local venture capitalist so I could pitch him my startup. I prepared like crazy to impress him. I worked and re-worked my slides a dozen times. I practiced my pitch in front of anyone who’d listen. Even my dog got tired of hearing me give it.
By the time of the meeting, I felt ready to go, and I was sure I was going to “crush it.” I arrived early to the VC’s office, practiced my pitch a couple more times in the car, and then I headed into his office. He led me to his conference room and sat me down, but before I could even extract my laptop from my bag, he began giving me his thoughts on my company.
In fact, the entire hour passed without me so much as opening my computer. All that prep work I’d put into my having what I believed was a great pitch didn’t matter. He’d formed an opinion about my company and what I was working on well before I had the chance to tell him about it.
Even more frustrating, many of his assumptions about my company seemed wrong. To be fair, I wasn’t a good investment candidate for him, and he shouldn’t have invested. But some of the things he seemed to assume about my startup’s stage, progress, market, and customer acquisition strategy were completely different from what I would have shared had he given me the opportunity to walk through my pitch deck. Why hadn’t he bothered to give me that time?
Over my next few years of fundraising, I noticed the same thing happening. Certainly not with every fundraising pitch, but it happened enough to annoy me. Specifically, while some VCs seemed to expect a full “song and dance” at the beginning of our meetings, others — correctly or incorrectly — seemed to have formed complete opinions about my startup without me so much as sharing a single slide. Why? What was happening?
Eventually I began to understand the problem. It’s a simple issue, but if, like me, you’re one of those entrepreneurs who spent hours reading articles about giving fundraising pitches before you ever gave your first one, the problem is surprisingly difficult to spot. So let me explain it here.
The issue you’re struggling with is that every article about pitching investors starts from the basic premise that a fundraising pitch begins with you actually talking with an investor. But that’s not actually true.
Instead, your pitch begins the very first contact your investor has with your company.
That’s right… the first time an investor encounters your company, that investor starts forming opinions about who you are, what you do, and whether or not you’re a good investment. In most cases, this means your first direct communication with that investor, be it an email or meeting at an event, etcetera. However, sometimes you can’t control the first encounter. Investors will discover you organically and start forming impressions on their own.
In my case, with the story I’ve shared here, even though I’d never met the investor I was pitching, we were both part of the same local entrepreneurial community, which meant he’d heard about me and my company through other channels.
What were those other channels? I don’t know. Were those other channels right or wrong? I have no idea. Nor did it matter. I couldn’t control how or what he’d heard about my company prior to my making contact. But he had, indeed, heard about it, and that allowed him to begin forming opinions.
While this might seem like a minor detail, it actually has the opportunity to be either a major help or a major problem. Luckily, you have more control over this than you might initially realize.
Recognizing that investors can learn about your startup before you ever directly pitch them gives savvy entrepreneurs a unique opportunity. Specifically, you have the opportunity to seed positive information.
That positive information could be as simple as being an active and well-respected member of your entrepreneurial community. If you are, investors in your local community you meet with are going to enter meetings excited to hear from you. Conversely, if you’re notoriously difficult or problematic in your local community, your local investors are probably going to hear about how difficult you are, too, and they’ll be wary of taking meetings.
Beyond your local startup community, creative entrepreneurs can concoct various ways of reaching investors before pitching them. For example, you might consider buying targeted Facebook ads, writing articles about your startup experiences on platforms like Medium and LinkedIn, or (depending how stalker-ish you’re comfortable being) connecting with people who are close friends with the investors you most want to reach.
Whatever the case, always remember that neither your startup nor the investors your pitching live in a vacuum. Everything you do prior to meeting with investors can influence how your startup is perceived. Because of this, when you’re prepping your pitches, don’t start with the assumption that investors will only know what you tell them in your slides. Instead, know that pitching investors begins the moment you make your startup public. Are you putting your best foot forward?
Author: Aaron Dinin, PhD