We’ve all had the dream, or some variation of it, where you find yourself standing in a room full of people, completely naked. You don’t know how you got there, or how you lost your clothes, but it happened, and now you have a hundred expectant and judgemental eyes on you.
You start to panic, you can’t find anywhere to hide and you end up standing there, just wishing that the floor would open up and swallow you whole. When you wake up, usually with a start, you are left with this lingering feeling of terror and despair.
This feeling of utter terror can be very similar to that of raising capital, where you are laying yourself bare at the feet of someone much more powerful than you, asking them for money. It can be a totally awful experience that leaves you feeling like you are standing naked in front of them with nothing to say.
The key to redressing yourself, item by item to get to a point of full confidence again, comes down to having a well-developed and prepared elevator pitch.
There may only be a single shot at garnering interest from potential investors so it becomes highly important that you are prepared to hook them straight away.
An elevator pitch, as the name suggests, is designed to gain the interest of someone in the time that it would take to ride the elevator with them. This is not enough time to tell someone everything they need to know, so they need to be left with enough of an interest to ask for more information, research the topic more or follow up in some way.
These can be high pressure situations, with that one shot to hook them in, and if not properly prepared, can leave you a blubbering mess with a missed opportunity on your hands. So it is important that you have a planned approach.
New Zealand technology companies sometimes struggle to sell themselves to potential investors. A constant debate exists as to whether this is due to a lack of capital funds available in the country or if the companies themselves aren’t providing a compelling enough pitch.
Too often the latter is true, tech companies aren’t selling themselves well enough. At least this means there is plenty of money about, but the problem lies in their story. We are fantastic at conveying what our products are, how they work and what is new and exciting about them. But sadly, this isn’t going to hook your investors, it means it’s time to review your elevator pitch.
A simple Google search provides hundreds of articles on elevator pitches: “The Anatomy of a Compelling Elevator Pitch”, “7 parts of a perfect elevator pitch”, “How to craft the perfect elevator pitch” and so on.
However, there are three key elements that everyone agrees on and one overlying absolute requirement: a hook, the key information, and a request.
If you don’t grab their attention early, you never will. Start with a statement or a question that immediately piques their interest. If you’ve done your research, you should know the topics and themes that would interest a potential investor in your company.
To do this research, talk to some of your current investors or supporters of your company to find out what attracted them to you and what benefits they are realising from the partnership. This will provide you with some key themes or hooks that you can use to reel in new investors.
The most attractive hook is when you can articulate a smart solution to a real (and large) market problem. Clearly conveying that is what excites investors.
The key information
Follow this up with only the most important information that you need to get across. This is more information to help the other person decide if this is worth their time or not. You should be able to, briefly, answer these six questions:
- What is your product or service?
- Who is your market?
- What is your revenue model?
- Who is behind the company?
- Who is your competition?
- What is your competitive advantage?
Although it is good to make conversation, you do want something out of this. You know it, they know it, and so it pays to come out with it clearly and concisely. If you are looking for $3 million in capital, tell them that this is what you are after.
A vague and fumbled request lessens your credibility and can confuse the process going forwards. Instead come out directly with what you are after; what your goal is.
The request should also be relevant and realistic. If you are asking a small scale investor for $50 million, you would be overreaching and will turn them off engaging with you further. Instead, make sure that it is a realistic request that is relevant to the person you are talking to, not just the industry they might be in.
This brings us to the overlying absolute requirement: your story.
To then create this story you need to take the value, assess and determine your market, and build a complete picture through the three elevator pitch elements mentioned above.
As mentioned before, Kiwi tech companies are great at selling their product features, but this isn’t what hooks the investors. It all revolves around changing your point of view and thinking of things from within your customer’s shoes. Do they buy a car because it is a metal box with a 2 litre engine and A/C, or do they buy it because it will take them to their destination faster than walking and more comfortable than biking?
By assessing this from your customer’s point of view you will start to build a picture of the value that you are able to provide, and this is what the investors want to know.
Knowing your market intimately is another factor that will help you build your story for investors. Where are they, how big is it, what companies are in your market, what do they currently use, what buying cycle do they have? These are all questions that you can answer to help build and determine your target market. Be as specific as possible. If you sell to everyone in that market, great! You then redo the process and choose a new one.
By incorporating your story into the three elements of your elevator pitch, you are ensuring that your listener is appropriately informed and interested in continuing the conversation with you. Each element is an item of clothing or comfort that you are putting back on to feel ready and confident.
It takes you from standing naked in front of them, not being able to communicate what you want and need, to being fully clothed and fully prepared for the engagement.
For more help in building your business through effective sales and marketing, download our free eBook “7 attributes of tech marketing success.”