Investor Presentation: The Overlooked Key to Raising Capital & Succeeding In Business


 

Over the past decade, I have written countless articles on how to raise capital. I have taught thousands of entrepreneurs how to create a great business plan, how to develop a strong financial model, and ways to devise a slide presentation that gets investors excited.

And then, I have written extensively about how to grow your company once you have raised capital. Discussing how to motivate your employees to maximize their effectiveness. And how to find partners that can take your business to the next level.

But there's one thing I haven't written about. One thing that I've totally neglected. And this one thing can increase your effectiveness at ALL of these activities - from raising capital to performing all the tasks needed to grow your successful business.

For this I apologize.

So what is this one thing?

The answer is public speaking, and your ability to communicate ideas to investors, partners, employees and others.

I realized that public speaking was the missing key when I recently reviewed a unique book called "The Power Presenter" by Jerry Weissman.

And, I might not have read the book if it had not received so much praise from venture capitalists. These VCs have relied on Weissman to prepare them to not only raise money for their own funds, but to teach their portfolio company CEOs so they could raise future funding and better grow their companies.

So, why are Weissman's teachings so important? Because, your ability to present effectively and be a great public speaker is critical to your ability to raise money for your business, attract and formalize relationships with key partners, and build a highly motivated team among other things.

And importantly, Weissman's research proves that the content of your presentations is less important than your body language (most important factor) and your voice (next most important factor).

Allow that to sink in for a minute.

What this means is that when you meet with a venture capitalist, angel investor or bank loan officer, your presentation skills are more important than the content of your presentation!

This fact is a bit bothersome to me.

Why? Because it means that an entrepreneur who has great public speaking skills but a poor investor presentation and business model has a superior chance of raising capital than an entrepreneur with a great investor presentation and business but poor communications skills.

But, rather than me pouting about this seemingly unfair reality, let me tell you some of Weissman's keys to making you a better public speaker and presenter.

First of all, to reiterate, the most important thing influencing your audience is visual (i.e., your body language), then vocal (your voice and speaking rhythm) and then verbal (the story you tell).

Secondly, when you present in front of a group, your natural "fight or flight" instincts kick in. Your adrenaline starts pumping and you often get anxious and fidgety. The way that you act as a result of this poorly impacts your audience's perception of you.

To decrease your anxiety, use the following techniques:

1. Practice, practice and practice some more. The more you practice your presentation, the more comfortable you will be when you give it.

2. Concentrate. Just like an elite athlete, you need to clear your mind before the presentation so  you can fully concentrate on the task at hand.

Important side note: many years ago, I had the pleasure of introducing entrepreneur and author Harvey McKay at an event. Before he went on, I saw him with his head against the wall talking to himself. I thought it was absolutely bizarre. But he used that technique to focus his mind and pump himself up. The result - he had the audience in the palm of his hand the whole time. It was truly amazing.

3. Shift Your Focus from You to Them. If you give a presentation and your best friend happens to be in the room, chances are that after the presentation the first question you will ask your friend is "How did I do?"

It is this mentality of thinking about yourself that makes people nervous. Rather, focus on the audience. Look at them and think "how are they doing?"  This will allow you to present more effectively.

4. Focus on specific people in the audience. Whether there are three prospective investors or business partners in the room, or you are speaking to a room of 50 or 500, you need to visually focus on one person at a time. That is, pick one person to start and complete your first main point. Then you should shift to different people for each key point you make during the presentation. This helps you concentrate better and make sure you are focusing on the audience rather than on yourself.

5. Practice your hand gestures. Hand gestures often positively engage an audience. But, making hand gestures in front of an audience often feels awkward and uncomfortable. You must practice using them with "warmer" audiences (e.g., your friends, co-workers and/or employees) until they become second nature.


Like it or not, your public speaking ability and presentation skills are more important than the content of your presentations. As such, successful entrepreneurs need to master these skills. Use these tips to improve your skills, and remember to really practice all your presentations before the actual event. As you know, in most cases, you only get one shot at key presentations.

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How to Make Your Ideas That Much Better


 

Every day I hear pitches from entrepreneurs about the great new product or company they are launching (or want to launch).

But unfortunately, more often than not, their ideas aren't that exciting.

Now, if you have great access to capital and are absolutely amazing at execution, then a "regular" idea is fine. In those cases, you simply go out and raise capital, launch your company, and then out-perform your competitors.

But, entrepreneurs who can do this are few and far between.

For the rest of us, we need an edge. Something that's different. Better than what's out there.

What I'm talking about is the kind of business idea that you look at and say, "That's really cool."

Now, these types of ideas typically feed off the wants and needs of consumers. That is, the entrepreneurs who conceive them have considered the true needs of the customer and modified existing products to satisfy those needs.

Importantly, in most cases, the customer hasn't even recognized the unmet need. But when they see the product or service, they realize its advantages and buy it.

I came across a couple examples of such "cool" products recently. The first was a pair of Reef brand sandals which has a bottle opener nestled in its sole making it "a mandatory accessory for a night out with the boys."

The second is Panasonic's BF-104 flashlight which operates with any combination of D-cell, AA OR AAA batteries. How cool is that...as long as you have 3 batteries, regardless of the type of each, it works (rather than all the time we've all spent searching for that last D-cell battery).

Neither of these innovations required years in the lab. Rather, they were both the result of the entrepreneurial mind coming up with creative solutions to the needs of their customers. (Note that the fact that these two innovations came out of corporations, rather than individual entrepreneurs, is even more impressive to me).

So, how can you maximize your creativity to come up with better ideas for your business?

Recently I created this video (http://www.growthink.com/content/breakthrough-business-idea-generator) that discusses one of my favorite brainstorming techniques called Assumption Reversal.

We have been using Assumption Reversal much more internally and coming up with some really neat ideas. I encourage you to watch the video and use Assumption Reversal for your business.

Finally, not long ago, I had the honor of interviewing Michael Michalko. Michael is the author of the book Thinkertoys which is known as one of the best books on creativity of all time. In fact, I learned about Assumption Reversal from this book.

I will be releasing more of Michalko's best creativity techniques in the coming months. In the meantime, try out the Assumption Reversal technique and keep brainstorming to come up with even better ideas.

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Exclusive Interview: Mark DiPaola, President of D3 Ventures


 

Recently, I had the great fortune of interviewing Mark DiPaola, an extremely accomplished entrepreneur.

As the founder of Vantage Media Corp., Mark raised a $70 million Series A financing, which is still on record as one of the largest Series A raises in history. And in 2007, his company generated $68 million in revenues.

As president of D3 Ventures, Mark also functions as an investor.

As a person with such success on both sides of the table - investing in growing businesses, and actually founding and growing businesses himself, I couldn't wait to interview him about entrepreneurship and raising capital.

During the interview, Mark went into great detail as he recounted his own experiences on raising capital for Vantage Media. One thing he emphasized was how important it is to know your business inside and out, and how this knowledge impacts not only your ability to grow your business, but also to achieve sales breakthroughs and get the attention of investors.

Mark revealed one website for job postings which helped him assemble a 35 -person team that brought in $40 million/year in revenue -- and it's not the website you might think!  We discussed hiring strategies, the number one factor to look for in job candidates, and when it's time to bring in a highly-experienced management team.

Regarding his role as an angel investor, Mark shared the qualities he looks for in a company before making an angel investment, and why it's important that entrepreneurs are referred to investors.

Growthink University members can listen to the interview here:

http://www.growthinkuniversity.com/members/291.cfm

For those who have not yet joined, you can listen to the first five minutes by clicking the blue triangle below:

 

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What Investors Really Mean When They Say They Don’t Need a Business Plan


 

It is common knowledge that companies need business plans.

Business plans are critical for setting goals and mapping out your plan to achieve those goals. They are also critical in order to raise capital. Whether you are seeking a bank loan, or capital from angel investors, venture capitalists or corporate investors, a formal business plan is simply a requirement.

However, there are some investors that say they don’t need a business plan. Rather, they just want to see a company slide presentation and/or a 1-3 page Executive Summary.

So, at this point you are probably asking yourself, “So, do I, or do I not, need a business plan?”

The answer is a resounding “YES.” Let me explain.

To begin, the types of investors that typically do not want to see a formal business plan are an extremely unique bunch. They are typically the top 1% of angel investors or venture capitalists. These are the investors that see so many deals that they don’t have the time to read through business plans.

Perhaps more importantly, these are the investors that focus on investments that could be worth billions of dollars within a few short years.

They invest in companies like Facebook or Twitter; companies that have massive potential but which may not even have a real revenue model in place yet. For companies like these, that are potential “game-changers,” creating financial projections or analyzing the current marketplace are much less important than for other businesses. As such, formal business plans with this information is less important.

Another key reason for creating a formal business plan is the knowledge that comes out of it. Specifically, the business plan process forces you to make a lot of key decisions about your business. For instance, writing down your marketing plan forces you to determine the marketing tactics you will employ.

Likewise, the business plan development process forces you to assess your market, identify customer segments and customer needs, and determine the strengths and weaknesses of your competitors. This is all critical information that you need to successfully operate your business.

The U.S. Small Business Administration, in a study called “The Small Business Economy,” found a direct correlation between a business’ success and its creation of a formal business plan. That’s because the business plan development process forces you to really think through the business and make informed decisions.

Likewise, the business plan development process gives you the information that you need to include in your investor slide presentation and Executive Summary. For example, one slide needs to include your financial projections and uses of funding. Another slide must talk about your marketing plan. All of this information comes directly from your business plan.

And what about information that is in your business plan, but which you omit from your slide presentation -- is that wasted information? NO. Before they invest, investors will bombard you with questions about your business, your market, your customers, your competition and so on.

Having completed, read and re-read your business plan, you will be able to quickly and correctly answer all of these questions.

So, when investors say they don’t need a business plan, they are NOT saying that they don’t want you to create a formal business plan. Rather, they are saying that the way they want you to communicate your vision and concept to them is not through a long written document, but via another format, mainly a slide presentation and/or 1-3 page Executive Summary.

So, learn the format of business plan and complete your formal business plan. It will give you the information you need to create a winning business strategy and attract investors. And, in addition to your full business plan, create an Executive Summary (which should be the first section of your full business plan anyway) and a slide presentation, since these documents will be required in the capital-raising process.

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How Dare You Susan Boyle!


 
I hope you're not a Susan Boyle fan. Because I have a major bone to pick with her. If you don't know who Susan Boyle is, she's the 48-year old British woman who gained international fame upon singing on the reality TV show "Britain's Got Talent" in April 2009.

So why am I so mad at her?

Because for 48 years she kept her talent to herself. She was too afraid to take a shot. To use her natural abilities and training to achieve real success.

I say "how dare she do this!" Is this fair to the millions, if not billions, of other people in the world who don't have this talent? Or who live in places where they have no ability to use their talent? And is this fair to the billions of others worldwide who have missed out on hearing her beautiful voice for the past four decades?

NO.

Now what really gets under my skin is when I compare Susan Boyle to an entrepreneur, which she essentially is.  How many natural entrepreneurs are out there who are letting their talent waste away? Who have tons of ideas and abilities, but are working in their same, boring jobs and not using them?

Why do I care?

Because they are failing to create wealth for themselves and their families. And worse, they are killing our economy. Because entrepreneurs like them are supposed to be creating great companies- companies which provide jobs, great products and services for the rest of us, and a tax base that feeds our government. Yes, they are failing themselves and their countries.

So why is this happening? I think it's because they are too afraid. Like Susan Boyle was for many, many years.  And unfortunately, in many cases, these entrepreneurs simply haven't gotten the kick in the pants that they needed.

Like entrepreneur Mark DiPaola who I spoke with the other day. Mark graduated from college and got a cushy job at a consulting firm. He worked there for a couple of years, and may have worked there for decades if he kept getting promoted.

But thank goodness, Mark got laid off. And then he went to work at a startup. And thank goodness, the startup failed. Because it was those two experiences which prompted Mark to start his own company.

Which he did. And which was a massive success. The company, Vantage Media, generated $68 million in revenue in 2007. In March of that year, venture capitalists and private equity firms put $70 million into the company and Mark was able to cash out and leave the company at the age of 30. And retire. And start a foundation to give back. Now that's what I call success.

Are you the next Susan Boyle? Do you have entrepreneurial talent, but are keeping it to  yourself? Have you not started your own company yet? Or failed to really grow your company? Well, I'm willing to bet that you have more talent than you let on and that you could be more successful than you currently are.

And, I also know what's probably holding you back.

MONEY.

That's right. Most entrepreneurs start their companies or grow them properly because of money. Which is odd, since successful entrepreneurs make tons of money. But, to become a successful entrepreneur, you often have to leave your current job and current income.

To solve this problem, many entrepreneurs, like Google AdSense founder Eytan Elbaz who I spoke with the other day, raise capital BEFORE formally launching their companies. They continue to work at their current jobs and develop their business plan and raise money. And then, once the money is in their bank account, they leave their current job and dive into their ventures full time.

And you can do this too! IF you know how to raise money for your business.

So, in addition to all the information that you buy and read on marketing, operations and other business disciplines, start investing in learning how to raise money for your business. Since that is the most essential skill for a successful entrepreneur.
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You May Not Have to Quit Your Day Job


 
If you haven't yet launched your new business, I have some advice for you.

It's actually not my advice. As I'm a little conflicted about it. Let me explain.

The advice is to start your new business as a project. What that means is that you don't quit your day job. You don't raise capital. You don't focus 100% of your effort on it.

Rather, you work on it as much as you can in your spare time until it either becomes something, or it doesn't.

The advice comes from Bambi Francisco, the co-founder and CEO of Vator.tv who I spoke with earlier this week. It's not only her advice having founded a company, but the advice given to her by Mark Pincus.

Pincus is the serial entrepreneur who founded Tribe in 2003 and sold it to Cisco Systems in 2007, and is now the founder and CEO of Zynga, a large social gaming company. You can watch Francisco's brief but informative interview of Pincus here.

So, the point is to start your new business as a project. Obviously, this depends on your choice of business. If it's a restaurant, there's not much of a project to be had. But if it's software, for example, you can start developing it and see if you are able to start creating features that people want.

And once you can prove that the project is developing into a viable business, you create a real company for it.

This "project" concept also reared its head when I recently spoke with Eytan Elbaz, co-founder of Oingo, the company which later would be purchased by Google and renamed as Google AdSense.

Elbaz and his co-founders were developing their novel software while still holding full-time jobs. After a little while, they were able to develop a working prototype. And then, Elbaz showed it to an angel investor (who interestingly was a client of his at his current job). It was only upon the angel investor writing them a check that they decided to leave their full-time jobs and really launch the company.

So why am I conflicted about this advice? Well, there's definitely something to be said for the entrepreneur that is so passionate about their business that they're willing to fully launch it from the get go.

To leave the comfort of their current job and take all the risk. In these cases, I like that the entrepreneur can't blame their current job for limiting their time. They fully immerse themselves in their business, and give it their best possible shot. And in many cases, this total commitment is what drives success.

The key here is probably that everyone's situation is different. The young entrepreneur might have an advantage in that it may be easier to leave their current position and jump 100% into their business. Conversely, the older entrepreneur with the family and mortgage may be less able to shoulder the risk of foregoing their current salary.

The choice is yours - take the leap fully or partially. Each can result in success.

The only choice that I truly hate is doing nothing. Too many people sit with great ideas in their heads but fail to act on them. And then, when someone else successfully executes on their idea, they say, "Hey, that was my idea."

To them I unfortunately say, "Who cares - it's the entrepreneur's willingness to commit and execute on the idea that really matters!"
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Last Chance to "Get the Skinny" on Market Research for Your Business


 

Have you ever heard of ZipSkinny.com?

If you go to the homepage of their site, you'll see a box that asks you to "enter your zip code to see U.S. Census data and comparisons with neighboring ZIPs."

Unless you're one of those people who gets excited about miscellaneous facts and figures, at first glance this might seem like an uneventful site.

But for those of you who provide products or services to local customers, the information available is *invaluable* in conducting market research for your business.

Once you type in your zip code and press enter, you'll see tons of great data on your local market. Such as the percentage of local residents who have graduate degrees or who are married. And, you’ll see economic indicators such as household income, and demographic information on race, age, and gender.  

As an example, I've just typed in 10549, the zip code of our office here in Mount Kisco, a suburban town  just outside of NYC. One fact that stands out to me right away is that 62.3% of residents have lived in the same home for 5+ years. Another is that the median household income is $75,761. Put these two statistics together, and you can deduce that this town is a fertile location for a business where both an affluent demographic and high customer retention are essential, such as a landscaping or cleaning business.

Whether you're looking to conduct preliminary market research before delving into a business, or examining markets into which you can expand your current venture, ZipSkinny is one of many tools that can help you with the process.

And in our recent report, "How to Quickly, Easily, & Expertly Conduct ZERO-COST Market Research For Your Business" I lay out this and several other tools to help you conduct the market research online at a level that is comparable the way it's done by experts with decades of experience.

As you might recall, I released this report at a STEEPLY discounted rate of one cent for each year of my wife's age, in honor of her birthday in March.  And that discount is about to disappear forever.  

On Thursday at midnight, the price is going up more than 100x, so as the subject of this blog post suggests, this is your last chance to get the information of market research experts for literally pennies.

If you are a Growthink University member, you can click here to grab your free copy of the report if you haven't done so already.

Otherwise to order now, click here. Or for more information, you can watch the brief video below:


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How to Raise Capital as a First Time Entrepreneur: An Interview with Brad Feld


 

Yesterday I had the opportunity to interview Brad Feld, who is considered among the elite investors in privately held companies.

For those of you who are not familiar with Brad, his background includes starting and selling his own software company, investing as an angel in 40 to 50 companies, and founding or co-founding three venture capital firms: Intensity Ventures, Mobius Venture Capital and Foundry Group, where he currently serves as Managing Director.

While there were several invaluable points for entrepreneurs seeking capital in the interview, I found the following to be most interesting:

1. Your VC firm is your partner.

Many first-time entrepreneurs view VCs simply as providers of capital. In actuality, VCs are partners. They exert control over your company. They have experience in product development or scaling companies, or both, and can provide significant value beyond the money they infuse in companies.

Because VCs are partners that exert control, you need to assess them much like you would other partners. Mainly, you need to make sure that there is a really good fit.

2. Angel investors are the friend of the first-time entrepreneur.

First time entrepreneurs should strongly consider angel investments prior to venture capital. Angel investors often have financing experience which can help entrepreneurs navigate the VC waters when they are ready (there are a ton of terms and issues involved with venture capital that most first-time entrepreneurs don't know about).

Angel investors also tend to have relationships with VCs. Also, angels often have the operational experience to help grow the entrepreneur's company. And finally, the angels' funding can help the company grow to a point where it is more suitable for venture capital.

However, when structuring angel deals, it is imperative to keep the pricing/valuation fair and the deal terms as simple as possible. If not, raising subsequent venture capital rounds becomes more challenging.

3. Don't look for investors who are not a good fit

Brad mentioned the 80/20 or even the 99/1 rule. Essentially, entrepreneurs should spend a ton of time on the 1% of investors who are a great fit. And not waste their effort on the other investors.

Two key aspects that Brad mentioned for ensuring a good fit are 1) geography (many VCs will only invest in certain geographic regions) and 2) sector (Foundry Group simply doesn't invest in Clean Tech; no matter how exciting the company looks). I would also add "stage" to this list as many VCs focus on companies at specific stages (e.g., some only want post-revenue companies, etc.)

You can listen to the full 30-minute interview by clicking the blue triangle on the audio player below:

 

Are you an entrepreneur looking to find angel investors for your deal?  Gain all the tips and advice you need with our Growthink's Angel Investor Guide.

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PR Strategies for Your Business: An Interview with Richard Harris


 

My recent interview with PR expert Richard Harris was enlightening. You may know that I owe a lot of Growthink's success to PR. A decade ago, I pitched the Los Angeles Times and they published a story on us. That day I received about a hundred phone calls, and at least that volume in emails. So, I focused the interview on figuring out how to replicate that success.

Richard serves as the founder and CEO of Momentum, which provides communications, strategy and placement agent services to private equity funds, investment banks, and selected early stage and non-profit companies. A 20+ year veteran of the public relations industry, Richard has not only an impressive client list (that includes The Girl Scouts of America, Polaris Venture Partners and Star Jones), but also a wealth of knowledge on this subject.

Some of the areas the Richard covered were:

  • Four ways to make your press release "newsworthy"
  • The three press release distribution sites that are worth using (and why you shouldn't use the other ones)
  • The different people you need to pitch if you are targeting websites and print publications versus television or radio media
  • The best time and day of the week to pitch journalists
  • What NOT to do if a journalist picks up your story


And many, many other critical points that every entrepreneur needs to know about if they want publicity for their businesses.

The full interview is available for members of Growthink University.

For non-members, you can listen to the first five minutes of the interview by clicking on the blue triangle on the player below. 

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How to Build an Effective Sales Team: An Interview with Adam Shaivitz


 
All entrepreneurs must be well-versed in sales.

We are always selling: Selling to employees as well as customers, investors as well as partners, etc. And those who excel at selling have a major competitive advantage.

To make sure that both you and I are in fact not only great at selling, but building an effective sales team, I recently interviewed sales whiz Adam Shaivitz.

If you're not familiar with Adam, Adam is the co-author of a best-selling book on selling called “Selling is Everyone's Business: What it Takes to Create a Great Salesperson.” He is also a sales consultant with Accelerate Performance who has consulted for Google, ADP, Pimco, Morgan Stanley, and many others.

Adam conveyed tons of great information. Two points that I especially liked were the following:

1. Make sure that you are properly motivating and solving the problems of your buyers.


The best salespeople are problem solvers who are able to sell the benefits of their offerings tailored to one or more of the six basic fundamentals that all of us as humans want:

  • Desire for gain
  • Fear of loss
  • Security and protection
  • Comfort and convenience
  • Pride of ownership
  • Satisfaction of some emotion like love or hate or ego


Great sales people understand which of these six motivators are most important to their prospects, and sell into them.

2. Spending time with your best sales performers.

Adam told us that too many business owners neglect their top sales performers. Rather, they tend to focus on improving their lowest performers.

There are two problems with this approach. First, working with and improving the performance of your best sales performers by only 10% may be easier and more beneficial than improving the performance of your lower sales performers by 25%. Secondly, your top sales performers are the ones that will be targeted by headhunters and other firms, and you can't afford to lose them.

A few of the other areas we covered were:

  • The keys to building a successful sales team
  • Adam's favorite ways to motivate a sales team
  • At what point can the entrepreneur or founder still run the sales organization and at what point should they bring in a dedicated sales manager
  • How to provide feedback, motivation, and inspiration for team members
  • How to transfer the skills of top performers to everyone else in the organization
  • How to create an environment that encourages improvement and performance

The full interview is available for members of Growthink University

To listen to the first few minutes of the interview, please click the blue triangle in the player below.

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