Fundraising for your business is rarely a walk in the park. It’s a tough process, regardless of the industry you’re in, it can take up vast amounts of time, and more often than not, ends in failure.
Communicating effectively with investors will really boost your chances of success, so we asked funding expert, John Auckland, to reveal which buttons you need to press to get investors onboard.
Having now completed more than 50 fundraises, I’ve developed a system that’s proving to be consistently effective. My experience has shown that there are some rules you must stick to when putting together an investor communications strategy.
There are three key topics for effective investor and funder communication:
- Identifying investor hot buttons, and creating a central message that wins them over
- The ideal investor journey
- How to talk to investors, both in-person and online
1. Investor hot buttons
Every investor wants to make a return on their investment (ROI) first and foremost. Behind this primary mission, though, are several influential triggers – or ‘hot buttons’. Concluding that an investor’s sole purpose is to make money is where the vast majority of entrepreneurs get it wrong – you also need to trigger a hot button or two and win over their trust.
A hot button is a proposal that fits with an investor’s worldview, and there tend to be two types you can trigger: emotional and rational.
Should an investor have a history of investing in property in the past, they might be interested in investing in a business with a property management solution. This allows them to diversify their portfolio – one such hot rational button – but via an industry they understand and have confidence in.
Proposing a charitable project to a philanthropic investor, for example, could hit their emotional hot button and bring them on board.
Triggering another hot button could see you present a strong opportunity to invest in a self-driving vehicle to a technophobe who recognises that they will become the norm in the coming years. Without hitting at least one hot button, you’ll struggle to bring any investor to the table.
To actually spot these hot buttons, just show the investor your pitch deck and financial model and ask them:
- What element most stood out?
- What, if anything could hold them back from investing?
Get answers to both and you’ll have a more balanced view. For a truly authentic answer, have a third party ask the questions.
2. The investor journey
There are some common faux pas within the fundraising industry when it comes to engaging investors. Firstly, you need to make sure the investor sees the information you want them to.
For example, if you send over your Pitch Deck before the investor is familiar with you and your company, it probably won’t be too impactful.
This is why you need to have some element of guidance. I made this trusty flow diagram to illustrate the ultimate investor journey:
The first step will see you send the potential investor an executive summary when you connect with them on LinkedIn, an investment website (e.g. the UK Business Angels Association) or in-person. This is an easily digestible document that summarises your key selling points.
This ideally one-page summary should include:
- The deal in full – both the amount you want, and the type (loan, equity, bond, etc.)
- A breakdown of your business (number of employees, customer numbers, size of the market etc.
- Your directors and managers
- Your point of difference (based on your hot button analysis)
- Traction, experience and achievements to date
- Any other key info that will interest investors
If the investor reads your exec summary and asks you to send over your deck, this is a strong sign that they’re interested. You should then try to follow-up with a face-to-face meeting, video conference, or just a call if you can’t book in either of these.
If you haven’t yet sent over your deck, it’s worth presenting a condensed version with no text to distract them. You’ll then be able to talk them through your business and have their full attention.
If you’ve had a successful meeting with a prospective investor, you can now justify sending them a full version of your presentation. Make sure the text largely mirrors what you said in-person, and that you include a full financial model in spreadsheet format. Just don’t send over a text-heavy business plan – I guarantee they’ll never get through it.
3. Face-to-face communication
When meeting an investor face-to-face or via video call (or to a lesser degree, on the phone) there are a few skills you can adopt:
Even though your pitch documents will be pretty concrete at this point, by listening to the investor, you can emphasise the parts of the presentation that are likely to resonate with the investor. Make sure you ask what they tend to invest in before you begin.
Spot Their Hot Buttons
You’ll know already be able to think of a few elements of your pitch likely to hit some hot buttons. While you’ll be able to gauge how to present your points of difference, it’s best to discover that your hot buttons don’t match sooner rather than later. It’ll save you a lot of time and energy in the long run.
Being in tune with someone’s body language is an effective way to help them relax, which is why you should always push for face-to-face or video meetings.
Clocking Positive Buying Signals
Folded arms and other closed body language suggests the investor isn’t interested. But remaining calm and engaging them as much as you can could lead them to opening up. Questions about numbers, vision, and timescales are also good signs that they’re interested.
Always Be Closing (ABC)
How does your investor feel now that they’ve heard your proposal? Ask them how they feel about your proposition and you’ll know what they like about your pitch and whether they have any reservations about investing. Even if you haven’t won them over, it’ll bring you valuable feedback.
While investment is never guaranteed, using this guide will undoubtedly increase your chances of raising new funds for your business.
This guide has been written exclusively for ByteStart by John Auckland, a crowdfunding specialist and founder of TribeFirst. Tribefirst is the world’s first dedicated marketing communications agency to support equity crowdfunding campaigns, and has helped raise in excess of £17m for over 50 companies.
Last updated - 5th April, 2019