Investor Meetings Unveiled: Secrets to Sealing the Deal

Investors can be tricky little creatures. A lot goes through their heads and no founder is a mindreader, but with enough research and a solid pitch that represents you and your intentions as a business leader, you can tickle their brains enough to see what interests them. 

During The Giant Warm Intro’s Founder Prep Session, investors reveal what goes through their heads when choosing a founder and the steps you can take before entering a meeting to get the most out of it. You may not always know what goes through an investor’s mind, but you can be prepared enough to get some form of reaction that might help your business grow.

About the Speakers

Moderator: Sarah Gibbins, Head of Experience at Rampersand

Panelists:

• Lauren Capelin, Venture Capital BD at AWS Startups
• Rachael Neumann, Founding Partner at Flying Fox Ventures
• Jason Atkins, Co-founder of Cake Equity

Making the most of an investor meeting

Going into an investor meeting can get pretty nerve wracking. You barely have any time to introduce yourself, pitch your deck, and convince the person in front of you to invest. It’s easy to ramble and forget a lot of things. Capelin gives this advice: “What I really want to encourage everyone to do first and foremost is actually zoom out from this concept of investor meetings and advisor meetings… I really just want to encourage everyone to think bigger about what that overall objective is that they're focusing on and let that longer range view actually help inform how to get the most out of the individual meetings that you have.”

Every meeting will have nearly the same elements. What Capelin suggests to make the meeting more nuanced and effective is to set an overall objective. She asks, “What's the longer term milestone or objective that you're focusing on? And how can you use these opportunities to connect with different people across the ecosystem to create your plan as you go and create a longer term strategy?” Once that has been identified, schedule milestones you want to achieve in a certain amount of time then work backwards. This helps set a guide on what you need to do and report to your investors and advisers later on.

"Another key element to consider during meetings is who exactly you’ll be talking to. What can you benefit from this person by having these conversations? Capelin says, “Take the time to do some research about who those people are that you're meeting. Try to uncover what experience they have in the market, whether it be the current role that they have or the fund or startup they work for. Dig back into their background. What's their specialization? What's their superpower? I think these are the most interesting and rich conversations–when you can actually tap into somebody else's secret source or special expertise because they're prepared to share a little bit more about what lights them up as well.”

Finding more about the person you’ll meet helps you specify what you need to share in return to convince them. Capelin adds, “There are some key bullet points in your pitch…that you need to get across no matter what. But it may be worthwhile to actually tailor or shape what you get across based on the expertise or the insights that that person might have. So stepping back and thinking out of this meeting, I at least need to share topic one, two, three. If this person understands these three things, then we're going to have a really fruitful conversation off the back of that rather than just treating every meeting as the same kind of template.”

Finally, Capelin reminds startups that the goal is to not just secure money, but to make the business grow. She notes, “It's always worth remembering that the key objective here is ‘how do you build the best business possible?’ And so questions that are focused around how can I strengthen engagement with my customers? How can I enter a new market? How can I build the strongest business model? These will always be more interesting to answer. You'll always get better insights out of the investor or the advisor as opposed to ‘how do I raise this amount of money so that I can build my business?’ If you keep that focus on building the business first and foremost, the money will follow where that traction and momentum is.”

The mind of an investor

As a venture capitalist, Neumann says investing is all about risk and return. Investors want to know how risky your startup will be and what kind of return you’ll get back. They’re looking for that perfect balance! With that, it’s important to identify what kind of investment you need in order to know who you need to have conversations with. Neumann says, “Know who it is that you are talking to given the stage of your business. It is incumbent on you…to do your homework on who are the right investors, either for your industry or your stage.”

According to Neumann, VCs are in the hits business. This means they're looking to invest with many companies, but with the assumption that only a few will have massive returns. VCs then look at companies with potential to succeed and turn down businesses that don’t appear to have the ability to scale. She says, “There are so many instances where we will meet great companies that we could see being really solid businesses. But if in our minds, we don't see them…having that potential, then sometimes we have to pass. And it's not because you're not great or you're not going to make a lot of money, it's not because you're not building a great product for a really important pain point, it's that we need to build a portfolio that manages how much risk we're taking on. And we need to look for some of these companies that we think are addressing a huge problem in a huge addressable market and have the potential to be big. So thinking about what kind of company you're building or you want to build…that might start to inform who might be your right investors. A lot of VCs see the world through this lens.”

At Flying Fox, they’ve boiled down what they look for in a founder into 6 T’s:

VCs don’t just look at the product–they’re more attuned to looking at the founder/founding team. Neumann says,

“Chances are the product you're going to bring us is going to be a real crappy version of what will eventually save the world. Chances are you’ll pivot a bit, maybe even take your product to a different direction. But what we're betting on is this person. The one who's going to be able to navigate these waters, figure out what's working and what's not, and more importantly, have the endurance to put your head up against a brick wall for a few years of your life.”

Convincing Neumann shouldn’t come from your product, but rather the problem you’re trying to solve. She says,

“Get us to fall in love with the customer problem. The customer problem will never change, how you tackle it is something that will evolve. Tell us about the problem and why it's so important. That is something that everyone can identify with. And people might say, ‘I don't agree with your solution,’ but we can all get behind a problem that we think is really substantial, large, and growing in its market. So the clear articulation of the customer problem is going to get investors interested and compelled that you are operating in an important space.”

Lastly, Neumann reminds you to have fun! “Hopefully you're doing this because you're passionate about it, because this is your life's work, because you can think of nothing else but to wake up every day and to do it. And hopefully you enjoy getting to meet some folks on the other side of the airmeet. Remember, we're here because we love this as well.”

We’ve got some tools up our sleeve

Years within the startup industry has provided Atkins with plenty of experience. In order to help founders navigate through the industry and build their business, he has produced an Equity Toolkit chock full of tips, templates, guides, and tools that you can access and use whenever you want. The goal of the toolkit is to help founders reduce the amount of time it takes to raise.

A tool Atkins dives into is the investor CRM template. Atkins says,

“The biggest mistake I see founders making is raising capital before they have enough investors...because if you don't have enough investors at the top of the funnel, you'll find it difficult to create enough energy throughout your round to be successful.”

This tool aims to help you manage your investors and identify how much you’ll need from them at each stage of your business.

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Atkins also goes into the startup valuation tool that features four valuation methods you can use. He explains, “It's not an exact science by any stretch. But going through this process, having an intelligent way to analyze and discuss it, talking a bit to your advisors and your investors, and when you go out to raise, you'll just be in a much better situation to articulate what you think you're worth and why. You can have a good conversation about that, which is a big part of it.”

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You’ll find lots of other materials in the toolkit that you can use in your startup journey for free!

Don’t let the bugbears bite!

We all want to turn our investors on, but there are some things that just might dim the light for them. For Neumann, two specific bugbears turn her off, “The first bugbear was when someone [was pitching] and I was like, ‘Cool. Is it built?’ And they're like, ‘No.’ I would much rather have someone pitch, ‘Here are the problems that we need to solve and we're envisioning a tool or platform that will be able to do this and this and this, and this is how we're thinking about it. And right now this is what's built or these are the tests we've run to prove that we're heading in the right direction.’ So it's always an awkward time when you've spent 20 minutes explaining this grand product vision, but I'd actually rather know what is built right now. What is it trying to solve?” 

The second bugbear would be,

“When you have an answer for everything.” Neumann continues, “I love when people say, ‘I don't know.’ I love when someone says, ‘This is my hypothesis that I want to test. Do you have any thoughts on this?’ Make it a conversation! When I sit down with a founder, I'm not looking for gotcha moments. I'm genuinely curious and either you have the answer or a hypothesis or I have no idea. And then there's something we can do together.”

For Capelin it’s when founders can’t get their words right and spew out hyperbolic statements that don’t translate. She says, “Language really matters and it's very easy to be extremely hand-wavy, especially when you don't even know the details of what you're trying to do. There's a lot of ‘we're doing this to change the world’ that don't actually get to the core of what matters. They don't get to the problem, they just speak about it in broad terms… So spending some time to really refine something much more specific and grounded in reality while also being able to paint a picture of where you think this is going–those are the magic moments in a pitch for me when a founder can do that.”

Combine these insights with your knowledge of structuring a meeting, the mindset of an investor, and a comprehensive toolkit, and you’re on your way to growing your business!