A number of start-ups in the midst of raising capital can fail miserably when it comes to capturing the attention of investors. One of the common reasons that I see is an inability on behalf of the entrepreneur to articulate a distinct problem that they are trying to solve.
If you are unable to articulate a definable problem then no one—let alone investors—is going to be interested in your solution. And you cannot raise capital for a business that does not address a definable problem.
Got a problem?
Your problem needs to be thought of as the bad guy. Who is the bad guy that your business seeks to conquer?
Defining your problem is the very first step in your journey as an entrepreneur. If youare able to articulate a definitive problem then what is your solution? Or better, who is the good guy in your story?
How is your good guy—solution—going to beat your bad guy—problem? Of course all good stories have a happy ending. In the case of raising capital, the ending needs to be a happy financial ending for investors. Your goal in life might be world peace but the end-game for investors is making money.
Once you have clearly articulated a definable problem that you are trying to solve, then you have not only past first-base, you have also taken the first step in defining a compelling plot for your company’s story.
Oldie but a goodie
For a business story, far and away the best structure to adopt is the familiar one of bad guy, good guy, and happy ending. The good-guy-beats-bad-guy plot is older than time immemorial. Think Superman and Lex Luther; Batman and the Joker, Luke Skywalker and Darth Vader, Erin Brokovich and Pacific Gas and Electric. You get the drift.
When it comes to your company’s story, the bad guy does not need to be a human. It could be inefficiency, loneliness, hunger, inertia, ignorance or excessive waste. The same can be said of your good guy. Your good guy could be efficiency, inclusion, food, movement, education, or less waste.
This can sound simplistic, and it is. That’s the beauty of it. The essence of your company’s storyline is its simplicity. Billion dollar industries can be examined via this simple prism. Medicine? The happy ending is a longer life. Insurance? The bad guy is catastrophic loss. Banking? Well your money is safer than it is under the mattress—presumably.
So your good guy fights the bad guy and your good guy wins. Everybody’s happy. If you force yourself to look at your own business idea and make it conform to this centuries old story structure, you actually strip away all but the essential drivers of your business. Picture a Ferrari without the body-kit.
It is essential that you think long and hard about this simple story structure and how it relates to your business idea. And ideally before you invest any time and energy in any other business-building activity.
Renowned author and entrepreneur, Bill Fisher, goes as far as saying that if you don’t get this part right then almost nothing else you can do will make any difference to your success.
If you do get it right, i.e. you have a compelling bad guy (problem), good guy (solution), and happy ending, then you not only have the keys to the castle, you have an inherently exciting business story, and the most powerful tools in the business-building trade.
The yellow brick road
Let’s apply this mode of thinking to some successful modern-day companies to bring this principle to life.
Who is the bad guy in Uber’s business story? Modern, real-time, dispatch of taxi services. “It is so hard to get a taxi sometimes, it takes so long and then I have to put up with poor quality service and pay undisclosed fees at the end”.
The good guy in Uber’s story? Showing customers where Taxis are in real-time via a mobile app, getting the taxi driver as close as possible to customer demand, and providing a convenient and seamless payment solution that requires no exchange with the taxi driver.
And the happy ending? Billions of people across the globe with access to better quality taxi services, and a more efficient means for payment of such services. This has created a colossal company with nearly $10 billion in revenue inside its first four years of operation. Yes $10 billion!
In his book, The 6 Secrets of Raising Capital, Bill Fisher uses the example of Google. Who is the bad guy in the Google business story? Lack of access to information. “I know the answers to my questions are out there somewhere, but I can’t find them, and so I remain in the dark”.
Who was the good guy? Google’s search algorithms and technology that collect and make available an unprecedented amount of information to billions of people. And that is the happy ending: Billions of people, performing billions of searches and, in the process, creating one of the most profitable companies in the history of commerce.
Make sure you have a long hard think about the problem you are trying to solve. This is the bad guy that you need to conquer and defeat. It’s the very first step in your journey as an entrepreneur. Knowing this will help you build a compelling story-line that better engages investors.
And remember, there is no civilization in the history of time that hasn’t told stories. Stories came before the wheel and they help us teach, influence, and bind people together. And hopefully they can help communicate your company’s story more effectively.
Ben Hucker is the founder and principal of IEvoke Communications. He has 10 years’ experience consulting to listed and private companies in Australia. Ben thrives on being an active member of the start-up and small business community and uses his passion for writing and business to help clients create a powerful message for investors.