Being a good storyteller may not be high on your list of priorities as an astute businessman or woman. It may even be something you hold in low esteem.
I can tell you now though that you will not succeed in raising capital and building your business until you become an effective storyteller. The good news? Storytelling is a skill that can be cultivated and learned.
Great business ideas are not enough, especially when it comes to raising capital. At IEvoke Communications, we have a firm belief that great business stories get funded—not great business ideas.
There is evidence to support this. In his book, The Six Secrets of Raising Capital, entrepreneur and investor, Bill Fisher, makes the point that Intuit—the US$30 billion accounting software giant—was unable to raise a single dollar of venture capital despite several years of desperate attempts to do so.
He goes on to point out that, Hotmail, another hugely successful tech giant, was also unable to raise a single dollar of venture capital funding despite several years pitching to investors.
On the other side of the coin, recent research shows that three-out-of-four companies that secure funding from venture capital funds, fail within the first five years of receiving investment.
There is clearly something else at play—other than the intrinsic idea for a business—if hugely successful companies like Intuit and Hotmail were unable to secure any form of venture capital funding. Their eventual success tells us they had a great business idea.
And if three-out-of-four companies fail within five years of receiving venture capital funding then they couldn’t have been great business ideas in the first place?
So if great business ideas do not get funded, then what does get funded? Human psychology and the notion of “animal spirits” may provide some explanation.
The term “animal spirits” was coined by the famed British economist, John Maynard Keynes. Keynes believed that “business decisions……can only be taken as a result of animal spirits”.
What is that triggers our animal spirits, what moves human emotions? Is it facts alone?
Let me illustrate with a small narrative: Facts: a lady died, and a man died. Story: A lady died, and her husband died of a broken heart.
Which sentence made your pulse run? Which method of telling gave you a rush of emotion? Notice the second sentence does not exclude the facts, it builds the facts into a story.
There can be no doubt that humans are motivated and moved by emotion. If you intend to transform your business dream into a reality then you will need to master the art of storytelling.
Great business stories have three essential elements according to author Bill Fisher—Bill single handedly raised more than US$500 million for a succession of start-up companies over a 15 year period—these include:
If you can master these core elements, then you can raise capital for your new venture or existing business.
People have been led to believe that investing and investment decisions are all a matter of arithmetic. These elements by themselves are not enough to persuade wealthy investors though.
In order to persuade, entrepreneurs and executives have to be able to tell their story, substantiate that story, and make that story memorable.
Feel free to get in touch with us today to see how we can help create a high-impact investment case for your business.