Knowing Your Customers, Your Investor Audience, and Using Stories to Communicate with Investors are Essential Parts of an Investor Pitch
It is critical to know you audience, do your research, and use stories to describe the problem you’re solving to investors. Using stories to communicate with investors is one of the most powerful tools you have as an entrepreneur that is trying to secure financing for your startup.
In this interview with Jeremy Glaser, who is a partner at the law firm Mintz Levin and also serves as Co-Chair of the firm’s Venture Capital & Emerging Companies Practice, we discuss the importance of doing your homework, planning, and learning about your target prospective investors. We also discuss how to use stories to engage and explain key things to your target audience.
Jeremy: I’m really intrigued by something you said, and it kinda ties into this trust. It’s the storytelling. When you’re working with entrepreneurs, how do you get them to develop that story so that it flows, pulls in the investor and they can experience the excitement in a way that’s visceral? I love that term.
Patrick: It’s about doing the homework. What market are you servicing? What’s your unique value proposition? Who is your customer? What is your customer avatar? What does your industry structure look like? What are the strengths, weaknesses, opportunities and threats?
You need to have that set of information available so that you know what problem you’re solving. There are typically multiple “whys” around that. Maybe there are five layers of “why” to get to the root of the problem that you’re solving for this customer. Why is it so important?
Customers have thousands of problems. Is this on the top two or three list of problems they need to solve that is causing them immense pain in their business or life? If it is, then can you describe that through an analogy, metaphor, case study or some way that people can relate to?
You have multiple tools to tell that story. One might be better than another. If something is extremely technical, you don’t want to describe it in such a way that someone needs a PhD in physics in order to understand your story. It goes back to knowing your audience. How do they think?
Know as much as you can about the individual and their experience. Describe it in such a way that they can hear you and understand. At a fundamental level, it starts with problem-solution. So many entrepreneurs that I see feel that it’s about the product, or the solution.
They don’t start with the problem. If they do describe the problem, they don’t describe it at a deep enough level to get to that root point of why it’s important. If they get there, then many times, they don’t have the other things. They don’t have the story, metaphor or analogy.
Jeremy: I don’t think a lot of them have that. You said something interesting. We tell entrepreneurs, “Do your due diligence on the investor.” It’s not just your investor who should do due diligence on you. You really need to do the due diligence on the investor before you send them something. Before you show up for a meeting, you need to understand the person’s interests. Today, with the internet, you can find out a lot about an investor. Then you know how to talk to that person. You’ll know what will resonate with them. You can’t just have one pitch. You have different pitches based upon the audience, the particular person and the particular fund.
Patrick: The warm contact, the mutual person that you and the prospective investor knows, if you’re using that relationship appropriately, it’s not just, “Hey, send me an intro email.” It’s about, “Tell me a little about this guy. How do you know him? What are they invested in?”
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This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.