by Donna Griffit, creator of “STICKING TO MY STORY: The Alchemy Of Storytelling For Startups“
I wrote Sticking To My Story as the last word information for creating profitable pitch decks. However earlier than I gave my profitable recipe, I did one thing that had my editors balking – I advised founders to ask you themselves a really severe query. Are they honestly prepared to boost?
Now, for those who’re a startup elevating funding, I need you to ask your self the identical. This isn’t a straightforward query to reply, however for those who aren’t prepared, stopping now and getting the traction wanted to be prepared could be the make or break of your fundraise – and your organization. If you’re not prepared to boost, even the very best story or storyteller will be unable to inform a narrative that will get you funded. It might be a bit like making an attempt to prepare dinner a gourmand meal when all you’ve gotten in your fridge is a few ketchup, a half-eaten yogurt and a few leftover Chinese language takeout. Regardless of how exhausting you attempt, a gourmand meal is not going to be cooked.
Over time, I’ve needed to cease working with founders on their pitches not as a result of their concept didn’t have potential or they weren’t nice founders. It was as a result of it was apparent to me that their startup was merely not prepared for funding.
Too many entrepreneurs are specializing in elevating capital as the tip aim, forgetting that it’s solely a way to a larger finish. You have to be pushed by what your startup can obtain with the funding slightly than the funding itself. Consider it as a pit cease on a really lengthy street journey, and also you higher buckle up as a result of it’s a bumpy street forward.
Tv could make fundraising look really easy. You may need seen an thrilling deal shut on Shark Tank. You’ll have thought that fundraising is so simple as going right into a room for twenty minutes and coming away with a brand new enterprise accomplice and a large test. The reality is, fundraising turns into a full-time job for founders and takes over their total lives.
With the funding frenzy in 2021, some founders started to assume that buyers hand out cash like hotcakes. Within the bleak actuality of those starkly totally different occasions, buyers will solely fund you for those who can show you’re prepared. Should you attempt to fundraise too early, what you are promoting will likely be ripped aside, and also you’ll burn a future bridge for not respecting the investor’s time.
How have you learnt while you’re actually prepared? There are three vital features it is advisable have nailed:
You fulfill an actual want.
When a startup tries to boost too early, the product nonetheless must be on the stage the place it might probably afford the dearth of consideration it receives through the fundraising part. It’s not unusual for a corporation to backpedal whereas the founders are busy making an attempt to boost the funding to develop. A little bit of a catch 22 that makes it even tougher for the startup to boost cash and makes he founders extra determined.
And you need to be doing the precise work and getting on the market to speak to potential prospects and for those who don’t have them but, you’re lacking a serious piece. You could speak to as many potential prospects as potential about this ache level. You could validate that it’s a ache — that they both lack an answer or the answer they’re at the moment utilizing is lacking the mark, they usually want one thing significantly better. Don’t be obsessed together with your answer — be obsessive about fixing their downside.
Traders is not going to be impressed for those who flip as much as a pitch and haven’t achieved as a lot analysis as potential. You possibly can’t anticipate them to validate your marketplace for you. Traders would possibly ask you some questions that take you unexpectedly about different corporations which can be trying to resolve the identical subject. They might ask you what units you aside. Don’t be caught off guard. Discover each single firm engaged on this ache – enterprise answer and even early-stage startups, know what they’re doing and determine how your method is actually totally different.
You possibly can solely clarify how your product is differentiated when you have a deep understanding of your prospects’ struggles and the gaps within the present merchandise. And for this, you want prospects, or not less than, design companions, which means a pilot buyer who’re concerned within the precise constructing of the product, providing you with direct perception into their wants and needs. Get them BEFORE you attempt to elevate.
Have an MVP or past.
Many founders dream of the “concept on a serviette” funding story, when in reality, they need to be sketching on fewer napkins and placing in additional sweat fairness earlier than looking for funding from exterior buyers. As a substitute of spending the majority of your treasured time fundraising, roll up your sleeves, dig deep, and work on creating an MVP — or minimal viable product. Have one thing that works on a fundamental degree or past to indicate buyers.
Keep in mind the conversations you had with potential prospects concerning the ache? Now, come again to them and see what sort of product they fantasize about. Construct your product with them in thoughts, and have them come on as design companions. Hopefully, they may turn into early adopters who will fall in love together with your product and convert to paying customers. And having a number of paying customers is one of the simplest ways to steer buyers that you’re a nice funding alternative.
Your plan is executable.
The ultimate piece of the puzzle is whether or not your concept can realistically give buyers the ROI they anticipate. You could do not forget that most startups will fail, so the potential upside have to be huge for it to be value taking the danger.
I flip down working with many founders as a result of their concepts are merely not venture-scale companies. To not say that they’ll’t turn into very good way of life companies and make their founders a major revenue. But when they’ll’t scale to a venture-level companies, there’s no level in spending money and time on creating an amazing pitch deck and speaking to buyers. You possibly can’t use a small pattern after which extrapolate to say you’ll be a success worldwide. That is very true if your private home nation or market is tiny. Even for those who’ve obtained prospects who love you and pay you on your private home turf, you will need to have a plan of how you’ll then penetrate main markets and compete with huge gamers.
Don’t go right into a pitch assembly with the imprecise concept of eager to increase abroad. Come armed with clear subsequent steps to which markets you’ll goal first and why. Then, clarify to them how their funds will assist get you to your subsequent milestone/s.
Additionally, earlier than you even toy with the concept of fundraising, have the correct group in place to handle the corporate successfully, particularly while you’re out fundraising. You could belief these folks with all of your coronary heart and soul. It’s some of the essential partnerships you’ll ever have. In your pitches, it’s not simply you being scrutinized, however your group and your group dynamics too. Startups shut because of unhealthy relationships between founders. Should you can pull collectively a gaggle of actually nice individuals who respect one another and have wholesome working relationships, the whole lot turns into extra manageable.
VCs know that you just’ll doubtless want a number of rounds to succeed in your huge finish aim. One Silicon Valley enterprise accomplice stated to me, “As soon as I write a test, I’m on the hook to assist them elevate their subsequent spherical. Having readability on what they may obtain within the subsequent 18 months is tremendous essential for me to see how they’ll elevate their subsequent spherical and the way I’ll onboard the very best buyers for them.”
Should you can inform them what you hope to attain on this spherical and the place you’ll be positioned after, you show to them that you just’re prepared for funding. Should you don’t meet these standards but — that’s okay! Simply get to work and attain as a lot as you’ll be able to earlier than you hit the roadshow.
Donna Griffit, creator of “STICKING TO MY STORY: The Alchemy Of Storytelling For Startups“, is a world-renowned Company Storyteller and Pitch Alchemist. She has helped over 1000 startups, corporates and buyers elevate over one billion {dollars} and speed up their gross sales with a private contact and unmatched messaging savvy, in any business, at any part.