Growthink Blog

Who Gets Funded? Great Businesses vs. Great Presentations


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From businesses come needs – like raising capital. Raising capital usually means pitching investors.

So which businesses are most likely to be among the approximately 5% who raise funds from professional investors? The chart below tells the brutal truth quickly and easily.

 

A great business which gives a great presentation is most likely getting funded.
A lousy business with a lousy presentation isn’t getting funded.

But what about a good business with a lousy presentation? Is it more or less likely to get funding compared to a good business with a great presentation? The answer probably won't surprise you.

After speaking with over 110 angel investors, VCs, entrepreneurs and educators, the consensus was solidly in favor of the good business with a great presentation. The deciding factor came down to the team, the single factor which most influences investors.

A person and a team who made a great presentation took the time to practice. Investors like to see the results of preparation and hard work. A great team willing to practice may simply need some advice and be willing to pivot, changing a good business into a great business.

A good business which gives a lousy presentation says to investors, “We didn’t care enough to put in our best effort.” The lack of preparation and the condescending attitude toward investors will derail just about any business seeking capital.

At the very least, it says the team is not ready, not mature enough, and probably not coachable.  With plenty of investing opportunities from which to choose, investors quickly move on.

Want to improve your chances when pitching to investors? Follow the eight recommendations below to maximize your chance of raising capital.

PRACTICE your pitch

If you didn’t practice 25-50 times before presenting, it will show in your lack of confidence, poor pacing, and use of filler words like “uh”, “um” and “like”. Then you’ll likely resort to the boring reading-slides-to-your-audience-with-your-back-turned method of pitching. Buy the coffin. You’re dead.

GENERATE some enthusiasm!

No one expects you to have over-the-top local sportscaster enthusiasm. But don’t pitch with a sleep-inducing monotone, either. If you don’t have passion for your business, neither will an investor.

PREPARE for contingencies

Fertilizer happens. Prepare for it.

* Know every slide in your pitch deck by heart

* Have two thumb drives with your pitch deck saved in PowerPoint / Keynote and PDF

* Bring your own laptop, projector, clicker, batteries, microphone, cables and cords

* Inspect the room beforehand, if possible. Know the lighting and sound conditions

BREVITY is king

Got 10 minutes to pitch? Finish in 9:45. Almost nobody finishes with a strong close in the allotted time. Investors love someone who can manage time effectively. It sends the message that you can manage other areas of business effectively, too. Keep your pitch deck to 10-12 slides maximum.

NAIL the opening and closing

Tell a brief story; do something unexpected; focus on emotion. Those are great concepts to open a pitch. Close powerfully with your call to action. Now think about how most people open speeches – and don’t do that.

STORIES sell

Sprinkle in stories to drive home a point, to magnify emotions, and to keep your audience engaged. Generally, a single story should take no longer than about 7% of your total pitch time. For a 10 minute pitch, a story is most effective when 45 seconds or less.

Use storyboarding, a technique invented by Walt Disney in the 1930s, to create your overall theme. Do this before designing your pitch deck.

VISUALS, not text

Your pitch deck should be primarily visual. You’re the focus, not your pitch deck. If your slides are full of text, your investor audience is reading the slides and not listening to you. Your audience can read faster than you can speak. When they finish and you’re still talking, they’ll disconnect. After that, they’re almost impossible to re-engage. Great visuals enhance your story because vision is the most dominant sense in people.

WIIFI: What’s In It For Investors?

Why you? Why now? Why should an investor care? When your pitch answers those questions in a concise yet detailed manner, your chance of funding improves.

Knowing your investor audience is essential. Pitching friends and family is somewhat causal, pitch angel investors is more serious and pitching institutional investors is sophisticated. Tailor your pitch accordingly.

Successfully raising investor funding is often a long, frustrating and complex process. Getting turned down dozens or hundreds of times will test an entrepreneur’s patience. Persistence doesn’t guarantee success but quitting guarantees failure. Investors use the process to find the most resilient entrepreneurs worthy of funding. Getting investor funding will often change your life and your world for the better. The guidelines above will make your process faster and easier.

P.S. The author Luke Brown is an Engagement Partner with Growthink.  If you would like to discuss how Growthink could help in creating your presentation for you, do reach out to Luke directly at [email protected], and / or at 310-846-5047


The First Thing I Learned In My Marketing Class


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I took my first marketing course nearly 20 years ago. And I absolutely loved it. I was in my third year at the University of Virginia, and my professor, Sandra Schmidt, was simply awesome.

She was one of those professors who loved what she did. She was always smiling, spoke with great emotion, and truly loved marketing and teaching. And on the very first day of class, I still remember to this day, she asked us two questions to test our knowledge.


Do You Make These Internet Marketing Mistakes?


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For many businesses, internet marketing is the “low hanging fruit” -- the most-cost effective method for gaining and sustaining a competitive advantage. 

However, most websites are poorly optimized for search engines and are not effectively designed to generate leads or produce sales. 

That’s why we’re developing a new webinar that identifies common mistakes as well as proven strategies and tactics to accelerate your website’s growth and profitability.

In this upcoming webinar, Growthink co-founder and President Dave Lavinsky will reveal:
  • Why achieving "top rankings" or "driving traffic" is less than half of the battle
  • Which segments of internet marketing are growing, and where you need to invest today to remain competitive
  • How to create an inbound "pull" strategy to have customers knocking down your door
  • How to effectively convert website traffic to prospects, buyers, and lifetime customers
  • Why a holistic, integrated approach consistently delivers superior ROI

Reserve your spot in our upcoming internet marketing webinar.

Learn more about Growthink’s internet marketing services.

How to (and How NOT) to Deploy Controversial Marketing


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What marketing strategies can you use to make your company stand out from the pack? In order to answer this question, many marketers push the envelope seeking to gain mindshare by humoring, shocking, or in some cases, offending their audience. Known as Controversial Marketing, these efforts do just that: they seek to spark awareness and dialogue through sensational, controversial content.

While often considered a guerilla tactic, best saved for fledgling companies in need of a “big bang,” controversial marketing and advertising initiatives have recently been adopted by many large companies such as Clearasil, Dove, GoDaddy, and Carl Jr’s.

But before Carl Jr’s made the decision to put a large cheeseburger in the hand of a scantily clad Paris Hilton, or Dove posted large billboards above New York City featuring un-retouched images of unclothed women without makeup, these companies had some strategizing to do. While a well-executed, controversy-laden campaign can be just what’s needed to push brand awareness or sales through the roof, the mantra “no publicity is bad publicity” is not always the case, and missteps can send marketing teams back to the drawing board, and that’s only after they’ve groveled for public forgiveness.

Before you decide to put your company in the line of fire with a controversial advertising or marketing strategy, there are a handful of things you need to carefully consider. First off, you must have a crystal clear understanding of who your customers are. If you can design a campaign that speaks directly to them in an honest and direct fashion, you are on the right track. Understanding their wants, needs, fears, and desires will help you to make decisions that don’t accidentally alienate any part of your target market. For instance, in the case of those racy Carl Jr’s ads, the company had an unwavering desire to address the 18-35 year old single male. They didn’t care if they alienated or offended the family market that companies like Wendy’s or McDonalds so eagerly pursue.

Secondly, you must always consider what the backlash might be. Not that this should deter your efforts, but upon creating a campaign, step back and ask the questions: “How many customers might we lose because of this?” This is the time for expert risk assessment. If you determine that you’ve positioned yourself to gain many more than you’ll upset, then its okay to go full steam ahead. No matter what, you must make sure you’re business is prepared to navigate whatever the repercussions may be.

The last and most important tenant of controversial marketing is to know when to pull the plug and apologize. There are times when companies overstep their boundaries, offending the good taste of those they didn’t mean to offend. Efficiently issuing genuine apologies can be the first step in repairing any bruised customer relationships.

3 Common Marketing Misconceptions


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For the growing business, the implementation of carefully targeted, high-quality marketing initiatives can make all the difference. The world of marketing, however, consists of a broad amalgamation of techniques and sub-disciplines that should, ideally, work harmoniously to convey what people need to know about your business. How does a company ensure that they’ve maximized the variety of options that marketing can provide?

Guerilla Marketing guru Jay Conrad Levinson recently wrote his thoughts on the most frequent mistakes companies make with their marketing initiatives. Through a list of 11 missteps, the problems are effectively boiled down to three main misconceptions:

1) The heart of marketing lies in the superficial, the “whiz-bang”, or the punch-line.

2) A business only needs one marketing mechanism at a time.

3) If the marketing is good enough, the results will be quick and earth-shattering.

The first of these errors takes hold when marketing executives lose site of their main purpose, which is to motivate people. Distracted from the primary mission, they might aim for a clever or humorous marketing stratagem. This is a trap. While humor or cleverness can successfully engage a potential client or customer, chances are those elements will overshadow the product or service you’ve set out to promote. Similarly, too much emphasis on entertaining your audience can eclipse your product or service as well. The job at hand is to make the truth fascinating – not to entertain for the sake of entertaining.

The second common mistake, especially in the case of many small businesses, is under-executing-- implementing only a pinch of the marketing ingredients at your disposal. Marketing areas such as direct mail, telemarketing, brochures, or phonebook advertisements, when executed properly, can provide a fantastic ROI for the growing company. Any of these elements alone, however, is just a drop in the bucket and can prevent you from reaching the full breadth of your target audience. Diversifying your marketing initiatives isn’t an extravagance – it’s a necessity.

The last, and arguably the biggest, misconception is that marketing is a “panacea” for the business; one that results in customers breaking down your doors moments after the launch of a campaign. It is true that strong marketing efforts will (and should!) correlate to increased profits, but it’s seldom overnight, and it’s wrong to expect miracles. As will many other aspects of growing a business, patience is a virtue.

So if these are the misconceptions, what is a true picture of marketing? As stated by Levinson, "Marketing is an opportunity for you to earn profits with your business, a chance to cooperate with other businesses in your community or your industry and a process of building lasting relationships."


The Marketing Plan: Documenting Your Growth Strategy


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The marketing plan describes your strategy for penetrating the market, delivering your product, and retaining your customers. This video explains how to create an effective marketing plan.

 

 

 

 


Increasing the Consumption of Your Product or Service


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Last night I went to the art fair at my kids’ elementary school. My son, Max, who’s in 2nd grade had created a picture of his ideal city (see below). 

 

 

I was thrilled to see that the Growthink office made the picture. :)  (It’s also funny to see that the city just had to have a video store in it).

Interestingly, there was something in the picture that I noticed, that I bet no other parent noticed. Can you see it? What I’m referring to is the fact that the Growthink office is the only one with double-doors. Clearly, my son has been schooled in Consumption Theory, which states that the more frequently your clients consume your products or services, the wealthier you become. So, by having double doors, Growthink can let in and serve more clients and create greater wealth (so I can buy my son more video games of course).

My favorite examples of consumption theory in action are Prell Shampoo’s use of the word “REPEAT” in it’s directions to get customers to wash their hair twice (and thus consume twice as much shampoo) each time they bathe. Adding the words “Use Daily” to the directions may have doubled Prell’s consumption again. My other favorite example is Colgate toothpaste, which dramatically increased consumption in an even easier way; it simply increased the size of the opening from which the toothpaste comes out.

How can you get clients to consume more of your products and services?


The Importance of Educational Marketing


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There are many companies that can thrive following the tried and true methods of traditional marketing initiatives. If you are one of those companies, it makes sense to place yourself in the most familiar arenas, where potential customers expect to see you. That is, if your intention is to compete with Coca-Cola for mindshare, it is probably in your best interest to utilize bold advertisements in print and television media.


But many other companies are learning that traditional approaches are no longer sufficient to convey their message and effectively convert the casual shopper into a paying customer or even better, a brand evangelist. It used to be that you could distinguish your company through lowest prices or a sparkling slogan. Now, however, these old silver bullets will barely leave a dent in the mind of the modern consumer. What can your company do today to stand out above the noise and clutter?


Enter: Educational Marketing

Education-Based marketing is the act of creating marketing materials and executing on strategies that distinguish your company as a knowledgeable authority and resource in your area of expertise. Notice the inclusion of "resource", as it is uncharacteristic to antiquated marketing approaches. It follows the revised premise that to be an active and valuable participant in the information age, one must become an information center.

With multiple, seemingly identical solutions popping up everyday in various industries, those that will shine are those that can lend a hand to their audience, rather than using that same hand to bludgeon their audience with an exhausted sales pitch.

Author David Frey has outlined not only how the average customer has become numb to the sales pitch, but also the underlying goals and burgeoning techniques of Educational Marketing. Your mission, should you choose to accept it, is to flip the script, and focus on the questions of customers rather than the sensational hype associated with a typical sales pitch.

Say you were the owner of an oil change store. A standard approach to market your business would be to place ads that say:

Get Your Oil Changed Here for Just $14.95!

By integrating educational marketing into your marketing arsenal, you might instead try:

“A new study finds that changing your oil every three months adds $1,437.81 to the resale value of your automobile. Come in to find out the effect of oil changes on the resale value of YOUR automobile.”

The information and help you can provide your customer is the new hype. The emphasis of such techniques revolves around the establishment of trust. By assisting in the open sharing of information, you become an ally to your consumer, rather than the oft-avoided vacuum cleaner salesman.

One main concern that can come with Educational Marketing initiatives is "How do I monetize these new informed shoppers?" Frey goes on to map out the packaging of one's educational message through multimedia options such as video tapes, email courses, and seminars which can extend the dialogue and thus your marketing window of opportunity. Such long-term, or “drip” campaigns can have a tremendous impact on the duration of your trust-based relationship and the lifetime value of your prospective customers.

What is your educational message?


Landing Page Optimization, Business Planning and Google's Success


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Over the past few weeks, I've spent a lot of time studying a field called Landing Page Optimization. It's a fascinating field that deals with improving landing pages, which are the pages of your website that visitors come to either organically or through paid marketing initiatives. The goal of Landing Page Optimization is to maximize conversions (e.g., sales, newsletter signups, etc.) of these visitors.

One of the guiding principles of landing page optimization is that landing pages need to be simple. If there is too much information on the page, the reader gets confused and either clicks the back button or closes the browser.

This principle is the same as a guiding principle of business plan development; mainly that the plan, and particularly the executive summary, needs to present the business concept concisely so that the audience quickly understands it. If not, they will simply discard the business plan.

Interestingly a concise message might not only improve your business plan and your landing page, but your entire business’ success. Consider the case of Google. The Google homepage has always had very little text on it. In fact, if you go to it, it doesn’t even say that it is a search engine. But, by having a big empty box in the middle and having a button underneath it that says “Google Search”, it is pretty intuitive that Google is a search engine.

Now, when someone was referred for the first time to Google over the past few years and came to Google.com, what do you think they did? Well, due to its simplicity, I think we can assume that nearly all people who came to Google.com typed in a search term and hit the search button. Then, they instantly saw high quality search results and were sold on the fact that Google is a great search engine.

So, by keeping their landing page and business concept/proposition extremely simple, Google was able to get people to try its product. Because the product is high quality, those trials resulted in loyal users.

While there are many examples out there, one interesting company that I think could really improve its business plan, landing page, and thus chance of success is SpinVox. I first read about SpinVox in this Guy Kawasaki post in which he says, “This service translates voicemail to text and then sends a text message to your phone and/or an email to your computer.”

While Guy Kawasaki does a great job clearly explaining SpinVox in this 22 word sentence, I don’t think SpinVox does. On its homepage, SpinVox has the following text:

"SpinVox captures spoken messages and cleverly converts them into text. It then delivers your message to a destination of your choice – inbox, blog, wall or space. Right in the moment. Giving you the power to Speak Freely... Simply put, we do one thing – turn voice into text. But it's one thing that can be applied to the many ways you communicate, from your Voicemail to your Blog. Use the finder below to find the right one for you."

If I were to come to this page without Guy Kawasaki’s clear explanation, I would most likely leave without trying the service. It neither clearly explains the most common use nor the value proposition of the service.

To sum up, KEEP IT SIMPLE. Use simplicity to hook the investor, the customer, the partner, or whoever else you are trying to influence. Once hooked, over time (which could be as little as 2 minutes later), you can tell the full story.


3/4/08 Recap: What Entrepreneurs Can Learn From Eight Year Olds


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Interesting news and perspectives from around the web:

  • Justin Nowak of YoungGoGetter.com explains the business lessons he’s learned from his eight year old son:
    • An Ability To Forget Bad Things
    • Determination
    • Creativity
    • Loyalty

  • Seth Godin warns us not to trust our own instincts too much. Everybody is different when it comes to persuasion.

  • PureVC discusses the role of trust and promises in causing the recent turmoil in the economy: When Things Have No Worth.

  • Pequot Ventures, a leading NYC venture capital firm, today announced that it is spinning off from Pequot Capital, to form FirstMark Capital in June 2008.

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