Preaching to startups in the midst of raising capital about what to prepare and what to say to investors is all well and good.
But without some rock-solid case studies then the pander becomes nothing more than rhetoric.
Every entrepreneur who has attempted to raise capital from investors knows how difficult the process can be. The endless round of emails, phone calls, meetings and coffees—not to mention running your actual business—means the capital raising process can quickly spiral into your worst nightmare.
Yes it's hard. But if you can get your message right in the first place then you can make your capital raising project a lot easier.
So if you're a young startup with very little operating history then keep reading. If you've recently secured much needed oxygen for your startup then you may also want to keep reading.
Lost, Now Found
About a month ago now I caught up with, John Anderton, one of the co-founder's of a young startup called FINDIT.ID. John is also the founder of Butterfly Creative—listed in the BRW Fast 100 in 2012.
FINDIT.ID has recently been able to close its $100,000 seed raise oversubscribed (nearly 2X). The funding came from a handful of angel investors.
The seed raise is the result of an enormous amount of hours finding, meeting, greeting and pitching to investors over the past two months.
Closing oversubscribed with very little operating history was an outstanding result for the FINDIT.ID founders. And a key component of their pitch was using the presentation materials prepared via our premium service offering at iEvoke.
This service is designed for startups that need to build a compelling investment case targeted at angel investors and sometimes institutional investors. More on this later though.
Where to Next?
FINDIT.ID came to us last year with a problem—how to structure and pitch their story to investors? We were happy to offer assistance because helping startups craft a compelling business case is what we do best.
Our solution on this occasion was to put together a business case that not only captured the attention of investors but also resonated with their hopes and desires, i.e. making money and being a part of something big.
What Did we Do to Help?
We put together a package of materials with the following key elements:
It’s important to note that we didn’t waste FINDIT.ID’s time putting together a lengthy and verbose document like a business plan or information memorandum—especially at this early stage (NOTE: the offer was targeted at sophisticated investors so a formal offer document wasn't required).
We focused on what matters.
What matters the most is having a clear and concise message for investors that elicits an emotional response via a story.
The Power of a Story
Of course that story can’t just be any old story—a work of fiction. FINDIT.ID’s story had to be substantiated with a war chest of supporting data and research since they had no operating history at the time they came to us.
Their story also had to be made memorable.
We’re happy to disclose that the secret to making your startup story memorable is contained in a single word: brevity.
And to build a story you need a plot. There are number of plots you can use to build the backbone of a story but the most effective framework to use when it comes to raising capital is the age-old plot of:
You know the structure well. The good guy defeats the bad guy and everyone lives happily ever after. Think Batman and the Joker, Luke Skywalker and Darth Vader, Superman and Lex Luthor, Erin Brokovich and Pacific Gas and Electric.
Making it Resonate
The next step is bringing the characters in that story to life.
In the case of FINDIT.ID, the bad guy (problem) is the billion dollar industry called “lost property”. And the good guy (solution)—a free, easy system for returning lost objects from ‘finders-back-to-owners’.
We built this story into FINDIT’s presentation materials. The procedure for presenting to investors was then transformed into a 3 Step Formula that looked as follows:
Rinse and repeat for each investor.
This proved to be a simple procedure for what is typically an exhaustive and complex process. And by putting together a concise set of materials, FINDIT.ID was able to go to investors with clarity and conviction.
The Underlying Message was Clear
“Billions of dollars of personal items go missing every year…” (PROBLEM)
“We’ve developed a free, easy system for returning lost objects from finders-back-to-owners…” (SOLUTION)
“This is how we expect investors to benefit 1. 2. 3. etc…” (HAPPY EVER AFTER)
And there were no awkward follow-up calls along the lines of, “Hi Mr high net worth. Did you get time to read through our business plan?."
The typical high net worth response is, “Ah what business plan?” or, “Uh, yeah but I only looked at the front cover and skimmed the rest so can you tell me more.”
Making it Stick
With a clear and compelling message, FINDIT.ID was able to achieve what a lot of startups fail to achieve—raise seed funding so they can grow their business and achieve their startup dreams and ambitions.
FINDIT.ID is now ramping up its human and I.T. resources in an attempt to bring its idea to reality.
If you’d like to know more about our premium service offering for startups like FINDIT.ID then please head to iEvoke.com.au. If you’ve lost your luggage or other personal items then head to FINDIT.ID to see what they can do for you.
And if you haven't already done so, please feel free to DOWNLOAD your FREE REPORT: “6 Capital Raising Myths Exposed” by clicking CLICKING HERE.
Ben Hucker is the founder and principal of iEvoke. He has 10 years’ experience consulting to listed and private companies in Australia. Ben thrives on being an active member of the startup community and uses his passion for writing and business to help clients create a powerful business case for investors.