Pitching to an Investor
How the Pros Did It.
Let me share my experience of raising funds with a Private Equity expert and how it changed my pitch deck ever since. We, collectively as a team (I wish it was me, myself and I), raised USD 100 million in a month’s time. Prior to our encounter between institutions, I had been advising on investments via investment holdings, recommending companies that we are investing in and why it should be part of your portfolio for the next few years. Then I back up that recommendation with a summary of several studies by other institutions. During the encounter, the private equity partner was not invested in the target companies yet, they didn’t even have any sort of pre arrangement with said target companies nor any guarantees that we will get that stock block.
The scope of investments were defined; unicorn status startups, invested by other pension funds or big name seed funding providers. What I was able to decipher after the entire experience was what information was presented, how it was presented and can I incorporate it into my own presentation with my own offerings. So what does it take to pitch to an investor (post encounter)?
The “What”
Prior to my experience, I had always talk about company experience, then I moved on to performance and return on investment. While successful to a certain degree, it was not convincing. Let’s be honest, if ROI worked, success rate of closing would have been in the high double digits. It wasn’t. 8% vs 6%, 8% would have gotten investors in. It didn’t. They started off with traction and growth prospects. What I suspect is that this information when presented in the beginning builds Trust. I would like to share this here, when pitching to an investor, trust is a very important factor. You can have the best portfolio, strategy, company background and they still wouldn’t come in because they don’t trust you. The way the P.E. partner pitched was that there’s growth in this sector, there’s already traction and the CEO even shared his failure by missing out on Amazon when he had the opportunity to invest in later stages. So the WHAT, is actually information that can build trust. When preparing your pitch deck, you should be focusing on what information should you be providing that can build trust towards your company and your idea.
The “How”
Before, I was pitching like how I wanted the entire process to go, I was eager to speak my mind, to counter their objections. The entire encounter with a potential investor became a debate instead of a persuasion. After they build trust, they focused on the process of their ventures and how the process of company selection went and why the investment strategy works in that way with minimal case studies. This part was more about the journey, which I have neglected in my early days in investment advisory. While I did talk about investment strategy, I did not present it as a step by step from a User Experience perspective if you will. The entire section sounded simple, conveyed the message that they will do the heavy lifting while the investors practically sit back and enjoy the ride. Although the main message was, “we need your funds to do this” they didn’t make it feel like that during the presentation. It felt like, they are the professionals, they are willing to share profits with us, and THIS was an opportunity!
My takeaway
Here I challenged myself to incorporate it into my own pitch decks first, and slowly it became clear, investors were more engaging, asking the right questions to help them make the decision instead of challenging you or doubting you. How do we know which questions are meant to challenge and which ones are engaging? I’ll do a short write up on this soon. After that, I started incorporating into startups’ pitch decks and they saw immediate effects where angel investors were committing more funds (a small F&B was able to raise MYR 1 million after taking my idea). So here I am. We will talk about pitching to a business partner in the coming newsletter. So don’t forget to subscribe.