You may have a product that is going to change the world. That will one day see you on a stage in front of thousands of people all waiting to hear about your new product. But is that all an investor wants to hear about in your startup Seed round pitch? Spoiler Alert: Nope.
Let’s set the scene.
You’re a tech startup, with a great product that everyone who has already bought, used and raved about, is now getting the attention of a well-known VC (Venture Capitalist — your potential investor).
You get a call from their assistant and they set up a meeting you can’t pass up. They want to talk about the product and see where it’s going.
Jaw. Dropping. Moment.
What do we do to prepare?
What do we talk about?
What do they want to see?
What investment figure do we present if they ask?
Either way, you got the meeting. BIG moment this one for your business’ future. Especially as you’ve not thought of moving to a stage of having investors come on board. So you’re basically at the first round of investor interest the ‘Angel’ or ‘Seed’ capital round.
There are another 4-5 other potential stages after this round too before reaching and Initial Public Offering (IPO) stage. But that’s getting a little ahead of ourselves.
Anyways you get to the meeting room and this guy, Gary Vee (below) is sitting at the other side of the table. What do you pitch?
Do you go in pitching the features and benefits of your product to them?
NO FREAKIN’ WAY!
Now I’m no tech investor. Nor have I ever stood in the shoes of a business owner seeking funding, though I have had a client that got onto Shark Tank with the help of the branding I created for them and they walked away with a deal.
Even so, I can confidently say that you should remind yourself in this kind of situation that you got this meeting off the back of them already knowing what you can do, this isn’t Shark Tank where you have to pitch the product as well and it certainly isn’t a reality TV show where you have to ham it up for the camera. This investor is a hot lead and this ain’t the time to reiterate the things a hot lead already knows.
Sure they might want you to clarify some things they are uncertain of, but that’s for them to bring up.
WHAT DOES AN INVESTOR WANT TO SEE OR HEAR?
A) A Business B) A Brand
Part ‘C’ is the product (or service) they typically are already aware of.
So what does an investor want to see from a business?
A well-structured business model that also considers the future
Current revenue (hopefully positive & growing)
Future financial & sales projections
Current market size and future growth opportunities into new markets or territories
The current and future needed team
What your business potentially needs in capital to grow
Positive track record (eg. no prior failed startups, especially ones that failed after investments were made)
Protected Intelectual Property (IP) that is trademarked/patented (if possible)
Roadmap for liquidity (ie. investment returns) stages for investors
A clear exit strategy to take their Return On Investment (ROI) and relinquish their equity stake.
How about from a Brand perspective?
An established name
A clear brand/marketing strategy for now and into the future
Defined and already engaged target market
Known market presence and market share
Brand values and mission
A strong, memorable and consistent brand identity
Consumer trust and advocacy (beyond family & friends)
Keep this in mind.
An investor is typically far more focused on recognising the effort put into building a business and a brand, than understanding the specifications or technical nature of what was put into making the product or service.
Understandably they may have been drawn to your product from and emotional or personal interest. However, they do also want to know what’s in it for them in the return for their investment. Along with what you’ve done to make it a sound investment beyond the product itself.
Because at the end of the day, they’re not just investing in the product, they’re also investing in you.
So presenting your business case I’m certain makes total sense to you, but why does an established ‘brand’ make such an impact on a pitch like this?
Having an established brand shows an investor quite a few things, the first being:
1. You’re playing an infinite game
Simon Sinek talks a lot about the infinite game. Hell, he even wrote a book on it which describes business leaders who “embrace an infinite mindset, in stark contrast (to a finite mindset), build stronger, more innovative, more inspiring organizations. Having a well-established brand is part of that infinite game an if your brand is one that is already known, liked and trusted, it may have been what caught that investors initial attention. This in itself instils confidence.
An investor doesn’t want to see an owner that’s only in it for the product and it’s short term sales success to get it off the ground and potentially make a quick buck. Ultimately, building a brand shows you long-term commitment and infinite game mindset that is focused on not just building a great product(s) but also a great business and a great brand.
2. It becomes one thing less to spend money on
In combination with a strong business model an established brand, most investors typically want to see their investment spent on business development and marketing. Not on hiring, not on helping you pay you or your team’s wages, buying more stock or in this case, branding.
If they have to sink money into a branding exercise, that in their mind is a missed opportunity for you to have already built an existing brand presence to work with. Which means they’re starting from scratch and their money is being put into branding instead of the areas that are going to create growth, both in the market and in your business structure.
Because without a brand you can’t effectively market or advertise. Especially when you don’t have an existing audience, it becomes an uphill battle from the bottom of the hill instead of halfway up it.
This isn’t to say an investor, like a Gary Vee who is well aware of the value ‘brand’ brings to the table, wouldn’t want to relook at your branding if they felt it needed some work. But whether or not branding has been done right the first time or after an investment has been made, great branding makes for greater marketing. The point, however, is that if that the groundwork has been laid prior to an investor getting involved, it’s one thing less to need to invest in.