Two weeks from now, millions of people will join a gym in the yearly quest to work off all that holiday weight. We’re all in favor of getting in shape, but we can’t help you with personal fitness. We can, however, help you get your company get in better shape.
If your mantra is new year, new capital, new growth, then you’ll want to tune into our new ten-week series on helping your company get funding fit. Increasing your funding fitness will increase your chances of securing new debt or equity investments.
Can you seek funding without being fully prepared? Sure, but it’s as ill-advised as trying to run a marathon without training first. Fundraising before you are truly ready will slow you down, add costs, and potentially damage your reputation, compromising not just your initial chances of success but your ability to raise funds in the future.
Over the course of the next ten weeks, we hope you will get a clearer sense of whether or not you are really ready for outside investors, and what you will need to do to reach the fundraising finish line without unnecessary pain for your gain.
Tip 1: If you can tweet, you can meet
Are you able to explain your competitive difference in 140 characters or less?
A few years ago, #TweetYourThesis became a popular meme amongst Ph.D. students. It was a bit of a joke, because it’s difficult to reduce years of research into one tweet. For entrepreneurs, your business idea may also seem too complex to be explained this way. But if the few words you would put in that tweet are not immediately clear and compelling, you may find it equally difficult to succinctly explain your unique idea when you first meet a potential investor in person.
Old elevator pitch: 60 seconds. New elevator pitch: 140 characters. Explain your value in a tweet. @ProductHunt @rrhoover #startups — Ian Mikutel (@IanMikutel) November 19, 2014
Remember too that your initial encounter with an investor these days can come in many forms. Rather than a formal presentation, it could be a tweet, a phone call, a text message, a webinar, or an online application form (we allow you to use up to a generous 500 words to describe your idea).
Whatever format or length, your pitch should tell a story around the core messages that articulate why your business is worth investing in. You need to be able to define in a few words:
The core problem you solve and how you’re solving it
The benefits for your customers
How investing in your company will benefit the investor
And remember that the elevator pitch is not the end goal—it’s just the start of the conversation. That means that your pitch can and should raise further questions. Once your investors are intrigued, they will grill you for details, at which time you can get into detail about the market opportunities and the uniqueness of your approach.
Gearing up to fundraise?
This guide explains explains the most important components of a successful fundraising strategy and how to prepare.