The Neglected 97%: Entrepreneurs Boot Camp Interview #10 - The One Thing in Your Way
For some time now I've been presenting you with insights from visionary CEO's of companies that have gone through vetting processes as a part of their fundraising efforts. I hope you've enjoyed reading about these people and the issues they've grappled with as much as I've enjoyed hearing their stories and documenting their successes. More importantly, I trust you've gained valuable insights into your own fundraising endeavors that you can use in a practical way.
Each person with whom I've spoken has traveled their own unique pathway from concept to funding and on to growth and expansion. They've each been at different places along that pathway, faced unique circumstances, grappled with different challenges and overcome distinct obstacles. But in another sense, they've all traveled the same road to a place called "funded." And they each shared something else in common: none of them traveled alone. Each was supported by myself and/or George Kenney at the Entrepreneur$ Boot Camp, or by Tony Smith and his team at Blue Moon Advisors.
Perhaps you remember the comedy western "City Slickers," starring Billy Crystal and Daniel Stern as greenhorns at a dude ranch and Jack Palance as Curly, the wizened old cowboy. At a critical point in the film, Palance shares his secret to success in life in a very simple way. "One thing," he says, holding an upturned index finger in front of Crystal, "just one thing. Stick to that and everything else takes care of itself." Crystal ponders that and says, "but how do you know what that one thing is?" "That's for you to figure out," Palance replies with a wry smile.
The point is, sometimes myriad things stand between you and success, but other times it's just one thing.
In the funding game, the trick is knowing which scenario you're dealing with; and if it's just one thing, being able to identify and resolve it.
And the best way to figure it all out is in partnership with an experienced mentor.
When Dan Magy, Founder, and CEO of Citadel Defense, which makes advanced drone interception technology, started down the pathway to funding he faced those same questions. Dan enrolled in the Boot Camp to find the answers.
To explore whether Citadel had several barriers to funding, or on the other hand just one, George took Dan through his "Deal Scrubber" process. This process tests every hypothesis about the business from George's unique perspective as a serial investor. Nothing is assumed to be accurate and nothing is overlooked. The goal is to identify whether a company's hypotheses hold water from the perspective of investors. I've seen this process work over and over, sometimes producing surprising results, such as the recommendation of a pivot, or even re-imagining the entire business model.
In Dan's case, the "Deal Scrubber" process revealed that his assumptions and hypotheses were valid and compelling. "It was clear that our product/market fit was very strong," Dan told me. "George could see that we had done our homework. We knew our market niche. We had a compelling offer that addressed a very important risk for customers. We had a proven sales process. Our team was complete."
Dan had also raised money successfully in the past for another venture in a related field. But to fully launch Citadel, he needed to raise a lot of capital and he needed to do it quickly in order to leverage first-mover position in a market that was poised to explode.
But there was one thing . . .
Dan hadn't identified that one thing on his own, but with George's seasoned eye it became clear.
Dan's pitch was too complex and too focused on the features and benefits of what Citadel could do for customers -- clearly an important thing to be able to do when selling customers. But for investors, the pitch needed to be different. After all, the investors weren't buying the product, but investing in Dan and his team being able to sell it profitably and at scale. The investors needed to know more about the "why" and less about the "how." Once they were excited about the "why" they'd be able to listen to the "how" and see that Citadel understood its' marketplace.
George helped Dan identify the "golden nugget" in his pitch. The "golden nugget" is that one exciting, compelling thing that moves investors from a place of fear and mistrust to a place of openness and desire to participate. In Dan's case that "nugget" was an identification of the widespread and potentially catastrophic problem that his technology was the only answer to solving. Once it was explained "succinctly" as Dan put it, the problem became obvious and the need for a solution became apparent. From that point, investors were interested in "how" Citadel solved the problem and why that solution would be in high-demand to customers.
Curley promised Billy Crystal that if he figured out that "one thing" and stuck to it, everything else would fall into place. That was Dan's experience as well, once George helped him to see that "one thing" and resolve it.
The resolution?
Practice.
Dan and George practiced and refined the pitch until it was boiled down to its most essential ingredients. Then, they practiced the delivery and the art of establishing and maintaining control of the pitch conversation.
Problem identified and resolved.
And the result?
Dan raised several mission dollars quickly and is now engaged in growing his business to the next level, fully funded and confident that if additional capital is ever needed, he'll know how to pitch it.
Key Takeaway: Sometimes, several things stand between you and funding. Other times, it's just one thing. Use an experienced mentor to help you discover which scenario you're dealing with. If there are several barriers to funding, at least you'll have clarity and can begin to work with a purpose to eliminate the barriers. If you discover there's just one thing between you and funding, your mentor can get you focused on resolving that one barrier and quickly moving towards funding. But if you never go through that process with an experienced mentor, you may never know how close (or far) you are to the promised land.