How to start up

Randy Komisar and Jantoon Reigersman pen down a no-nonsense guidebook on the dos and don'ts of entrepreneurship 

Published 6 years ago on Jun 16, 2018 4 minutes Read

Rule 54- Make it personal

In the stampede toward the bank, it is easy to forget that business is all about people. Your pitch should specifically address three of them: you, your customer, and the investor.

First, it’s all about you. Who are you? Why are you doing this venture? Why are you the best person to make this venture succeed? There’s no need to deliver a heart-piercing personal narrative  we’ve both seen some pitches carried to this extreme  but telling your personal story, authentically, can make a big difference. Your venture may boil down to a “big data for farmers” business, but your roots in a small farming community, your high school job distributing boxes of fresh produce for local farmers, and your work after college at Cargill, learning the ropes of Big Agriculture, all paint a compelling picture of why this is important to you personally. Your committed work with local food banks, for instance, demonstrates a passion for solving the problems of real people and adds more than a touch of humanity to your venture’s being just another big-data play. Explaining why this is important to you goes a long way toward explaining why it should be important to your investors.

Second, it’s about your customers. Who are they? What value are you providing them? Why should we care about their problems? Sometimes entrepreneurs are advised to create “avatars” that represent the characteristics of your target market. But your customers are not just wallets; they are the living and breathing purpose of your venture. Explain that small farmers are very different from Big Agriculture, eking out a modest living on their tiny farms while working two jobs in town to pay the mortgage. Tell investors how undeserved these farmers are by the dominant players, which focus on factory farms rather than mom-and pops. Show how your service will help small farmers to make the best decisions for their businesses, their families, and the environment. Make the investor care whether this customer prospers or withers.

 And finally, it’s about your investors. Investors see thousands of pitches a year. Most come to them as part of a seemingly random, shotgun approach to finding money. It’s the startup version of boiler room cold-calling, with just a bit more sophistication. But an investor wants to know why she or he is the right partner for you, why you chose them specifically. Is it because they have a portfolio in agriculture technology and can bring insights and connections to your business? Is it because they have a reputation for developing leaders and building successful businesses? Is it because you saw them speak at a conference, and their point of view and approach to startups particularly resonated with you? And don’t forget to include a slide that specifically asks them for contributions beyond their money. Investors have egos, too, some notoriously large; don’t ignore them when making the pitch.

Rule 55- When pitching, carefully read the room.

Make sure to “read the room,” arguably one of the hardest things to do during presentations and due diligence. You are nervous, focused on not making a mistake and presenting complicated material. But you still have to pay attention to what is going on around the table. Not only is the quality of your pitch and delivery important, but assessing the body language and carefully listening to the question raised are critical to understanding each investor’s concerns and doubts.  After an investor meeting, you should be able to tell whether they are interested in investing based on their level of engagement and reactions.

Avoid overloading the audience with information. While you know your business cold, for them it may be the first time they ever thought about these topics. Reading the room will allow you to determine how best to follow up and address each investor’s particular due diligence hurdles. Remember: investors like to think you are addressing them personally, not that they are simply one of a number of random pitches as you troll for money.

The questions asked and the recurring topics discussed reveal key concerns, worries, and assumptions that the investors may uniquely have based upon their prior experience, the experience that forms the lens through which they will evaluate your opportunity. Whatever you do, address their questions honestly and directly, even if it means asking for time to consider their requests so you can get back to them later. The pitch is not just an opportunity to communicate information, but also a rare chance to build trust and demonstrate mastery. To be clear: it’s not just your business they are evaluating  it’s you.

This is an extract from Randy Komisar and Jantoon Reigersman's Straight Talk For Startups published by Harper Collins