September 8, 2020 5 min read Opinions expressed by Entrepreneur contributors are their own. If there is one thing Shark Tank has made completely clear, it’s that entrepreneurs should know every aspect of the numbers of their business. Walking into that room, you better know your cumulative and year-to-date revenue numbers, cost of goods sold,
5 min read
Opinions expressed by Entrepreneur contributors are their own.
If there is one thing Shark Tank has made completely clear, it’s that entrepreneurs should know every aspect of the numbers of their business. Walking into that room, you better know your cumulative and year-to-date revenue numbers, cost of goods sold, and customer acquisition costs, or you’re toast.
With images like this as a guide, it’s no surprise that everyone thinks the most important things for meeting with a potential investor are projecting as much confidence as possible and nailing all the numbers in your presentation. But what’s really critical is some other work you do before you even open the door and step into the room.
Ask yourself these three questions:
1. Why do I do what I do?
Of course, the numbers of your business are important; you should definitely be able to rattle off your revenue numbers and your lifetime value of a customer, and you should most certainly be able to explain how you plan to wisely use the funds you’re raising. But confidence does not come from knowing your numbers. It comes from knowing your “why.”
Why do you do what you do? And why should investors care?
Your “why” provides focus not only for your presentation or pitch but for your business. It gives you and your team something to lean on when times get tough when there is a difficult decision to make, or when you’re in front of an investor and are starting to get nervous.
If you need to discover your “why” or put more thought into how to articulate it, consider this: what are the values being reflected in your business? Values such as integrity, joy, curiosity, freedom, and creativity nobly drive us toward our goals. Lean on these values. Confidence comes from knowing who you are and why you are in front of this investor.
2. How can I make an emotional connection with the investor?
During that investor meeting or pitch, make sure to communicate your value proposition clearly, know your audience, and maintain the authenticity of your narrative. When meeting someone for the first time – an investor or not – it’s important to have resonance if the goal is a lasting relationship. Resonance is the creation of an emotional connection; it’s saying the right thing at the right time to the right audience.
Ask yourself, “Who is my audience?” and really home in on what’s at stake for them, as it can vary depending on the type of investor you’re speaking with. For example, an angel investor is likely using their own money — if they don’t invest in your business, they may choose to invest in the stock market, or they may even decide to take a nicer vacation. A venture capitalist is using someone else’s money; they have a fiduciary duty to do the job for which they are getting paid. A limited partner is also using someone else’s money, and they are likely only salaried, so their interest is completely different. Presentations made to each of these audiences should be focused on what’s important to them.
Not only should you put yourself in your audience member’s shoes to speak to what’s most relevant to them, but you should also seek commonality with them. Emotional connection ultimately comes from commonality, and the more specific, the better. For example, at the beginning of the Covid-19 shutdowns, we all felt disoriented, but practically speaking, most of us had to find a new location to work (probably a dining table in our kitchen) that wasn’t as comfortable as our usual space. In networking meetings and presentations, speakers who commented on their back or neck pain immediately gained Brownie Points with the audience for talking about a specific commonality many of us were experiencing. Other commonalities could be colleges or universities attended, community involvement, or hobbies such as gardening, sports watching, or wine/whiskey drinking. Don’t be afraid to jump into these things, as they can serve to strengthen your bond.
3. What impact is my company making on my community?
It’s not just social impact investors who care about your influence on the broader world—many angel investors, VCs, and limited partners want to know that your company will create jobs, or that communities will receive tax revenues from your business that allow them to invest in themselves. Put another way: have some concrete examples of how your business will make a difference.
The impact your business makes on your community could take you back to your “why,” and in a way, it should. There is nothing wrong with seeking to make money, but many investors want to know you will make them money by improving society in some way.
If you ask yourself these three questions before that investor pitch or meeting, you’ll be more likely to have confidence in what you do, resonance in what you say, and influence when you deliver. You might just hear the word “yes” from investors more often.