Pitching Investors Effectively #1 – The Knock Out

Pitching Investors Effectively by Intelliversity

Pitching Investors Effectively #1 - The Knock Out

I'm excited to share some new research, hot off the presses, that is sure to interest you if you're preparing to raise capital or already in process with a funding raise. Sometimes, data paints a very clear picture that you can use immediately to your advantage in pitching investors effectively. So, here's the deal:

Evidence shows that investors almost never write a check -- no matter all the other factors favoring you -- if they can't repeat it clearly to others.  Now, I've written extensively on the subject of perfecting your pitch for maximum investor impact. I highly suggest you review those posts, so I'm going to lay them out for you right here. Each tells a part of the story of successful pitching. Add the new data to that and you've got a recipe for pitching investors effectively.

At the very broadest level, to pitch successfully you've got to be able to successfully court power (How to Pitch Investors and Win). As I pointed out in that post, courting power is a learned skill, not something you need to be born with. In short, you court power successfully by turning the tables and being the thing power, itself, seeks. You become the prize and you do that by taking the moral high ground (Become The Investor Whisperer). Oren Klaff, in his bestseller "Pitch Anything," points out that human nature is geared toward respecting the game-changers who are out to make a difference. That's you and that's the moral high ground you take if/when confronted with an investor who wants to lord it over you that they have the money and you need it. Re-frame that by taking the morally superior position and communicating that.

To successfully navigate that territory it helps to have a map. I provided you with a map to the investor's brain (Be The Pitch Master) in a prior post. Recall that investors, like everyone else, operate at three brain levels -- croc, dog and rational human. You want to pitch to the rational human brain, but you have to get past the croc and dog brains first. The croc brain has little patience and a lot of fear -- it is thinking, "do I kill, run or is there something interesting here?" Assuming you've interested them at the reptilian level (and read on to learn how VERY important that is) you get to the social brain -- what I call the dog brain. The dog brain wants to figure out whether you're socially acceptable -- do they want to be in a social relationship with you; i.e. simply enough, do they like you? Investors rarely invest with people they don't like spending time with.

Now what we teach at the Entrepreneur'$ Bootcamp and what I've written about in the past is that you have about 30 seconds (The Elevator Pitch to Investors) to get from the croc brain, through the dog brain, to the rational mind of an investor. And that's where this new data is so vitally important. The good news is that I can summarize what you need to do very quickly:

  1.  Be exciting -- say something unique and interesting, maybe earth shaking, never boring;
  2.  Be simple enough that they can understand at first glance, not confusing;
  3.  Be memorable, so that they can and want to repeat your key points to others without change;

Together, I call such a pitch "viral" - investors repeat it over and over again, behind your back, to one another.  Add a little intrigue, and your investor will want to learn more, which is the result you need first.

That's it. Simple eh?

Not so fast.

Remember, what is interesting, simple and memorable to you may not be those things to an investor. And the fact is they simply have to be, or they'll say "I'm out." Exciting, simple and repeatable can't come across as crazy, unbelievable and dangerous or you'll never get past that old croc brain. Yet, if there isn't a touch of intrigue in what you have to say the croc brain will lose interest immediately. So you have to master the art of being really interesting without being perceived as crazy or dangerous. One way to do this is with a very succinct set of statements about what you do and why it is important, concluding with an unexpected solution. It is that unexpected solution that can capture their attention, stick in their memory and perhaps get them excited to tell others about you. Because the evidence is that a major reason investors say "yes" is that they can and want to tell others about who you are, what you do and the cool way you solve an obvious problem.

It is said that in the midst of World War II, President Roosevelt realized he had a major problem. The Soviet Union was gaining strength and taking ground towards Berlin ever more quickly and decisively. As Hitler's regime fell apart and his armies weakened, it became obvious to Roosevelt that if the Allies had no major presence in Europe the Red Army might march straight across France to the Atlantic. So Mr. Roosevelt needed a second front. But it was a tough sell because the Allied bombing campaigns were ever more successful and an invasion of Western Europe would come at great cost of lives. General Eisenhower would have to be convinced that an invasion was absolutely necessary and that it could succeed and not at horrible loss of life. Here is how Roosevelt pitched his plan to Ike:

  1.  The Russians are coming
  2.  Therefore, we must invade France ASAP
  3.  Use Patton as a diversion to reduce casualties and ensure success

Patton as a diversion!?!?

Now that's memorable!

But not crazy . . .

Both Roosevelt and Ike knew that the Germans believed Patton was THE man the Allies would send against their 'Fortress Europe' if they chose to invade. Bernard Montgomery was another obvious choice, but not to the German mind, because they saw Patton as the man who had defeated the vaunted Erwin Rommel and his Panzer Corp in North Africa. So Ike liked the idea AND he was able to go and pitch it to Churchill successfully. Patton got command of a 'dummy' army and false reports were sent out all over indicating that Patton would attack the French port of Calais imminently. Hitler believed it and set up his entire defense of Western Europe based on a Patton-led assault on Calais. When hundreds of thousands of Allied troops landed 100 miles away on beaches in Normandy on D-Day, German resistance was far less fierce. By the time the Germans realized what had happened and transferred divisions accordingly, it was too late. The Allies forged a beachhead and marched all the way to Germany eventually.

When you pitch an investor think in terms of how your pitch will be received such that the investor can pass it on.  He has to find your problem/solution set intriguing even exciting, understand it easily, and most important, he believes he can repeat it accurately. If you can accomplish those three things (in 30 seconds!) your message will be memorable and viral, and the investor listening will feel confident that he or she can enthusiastically tell others about it.

Now, why do you suppose it's so important that your investor feels confident in telling others about your business?

It's important because investors, like anyone else, like to gather evidence to support a decision they plan to make.

  1. If they can share your pitch with people they respect and get positive feedback it gives credence to their decision.
  2. Investors are frequently part of decision-making teams (investment committees) which have to understand a message that one member has heard.
  3. They also like to get others they know involved in their investment (syndication). So that's why it is vital that your pitch be memorable -- so they can repeat it to others.  I'll have much more to say in future posts about how to be memorable, really make an impact when you pitch.

Proven Pitching Tip #1

A great elevator pitch needs to be viral -- a combination of exciting, simple, and repeatable, so much so that an investor can pitch it forward to his or her colleagues, friends, family and other investors.