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Effectively communicating what your business does and why it matters is vital for entrepreneurs who want to raise capital and attract investors. However, today, when most founders get advice from the same few sources, every pitch it's starting to sound generic, with the same tone, structure and revelation.
Today, I want to discuss two tactics my clients have used to raise millions in venture capital that aren't “common practice” and help them right away improve their pace making it clearer, stronger and unique.
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1. Using a perspective frame
99% of the fields start with the problem. You'll often hear founders dive deep into a problem they experience or those around them experience as they explain it. pain indicates an investor. The problem with this is that if the investor can't relate to the problem, they immediately disengage. This is not just an observation; the data returns it.
for Harvard University, 11% of investment partners in VC firms are women; consequently, 13% of venture capital investment dollars go to startups with female founders. Basically, when a woman comes to offer a solution to a problem women face, unless there is one female investor there to hear the voice, most men do not understand the problem. The proof is in the data, as when VC firms increase the number of female investors, those firms suddenly see higher returns and more exits on investments in female founders.
So how can you solve this problem using a perspective frame?
A perspective frame should be the first slide of content (the second slide after the title slide) in your pitch. It should tell the investor how to look at it the rest of the deck. The objective is to get them to view your company not through the lens of their own experiences and biases, but through the lens that best demonstrates its potential and impact.
Here is an example of a perspective frame from a past client:
“Have you recently been sent a news article or seen a link on Twitter and clicked only to be hit with a wall? If so, you're not alone. Every day, billions of people like you are blocked from reading news.
Now, do you remember that title? Did you share it with someone else? Were you able to verify that it was true?
Today, 76% of publishers use paywalls. They are encouraged to use clickbait headlines to drive purchases. These headlines, shared innocently by billions of people just like you, are fueling an epidemic of misinformation that is causing political instability, promoting violence and, in recent years, contributing to the deaths of millions.
If someone could change the incentives for publishers and make full news articles affordable for everyone, they would not only revolutionize the $36 billion news industry, but solve a major social crisis.”
it perspective frame instantly reframed the way investors would analyze business. They would no longer see a news subscription service and decide whether to invest based on their personal interest in using the product. Instead, they saw a company solving a massive social issue in a huge market. The rest of the deck is interpreted through their ability to solve this social issue and capture that market, not by the investor's chances of becoming a customer.
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2. Submit your offer
The biggest problem I see with many pitches is that no matter how great they are, they always end up feeling like the entrepreneur is asking for money. It rarely comes across as a can't-miss investment opportunity, and instead, I feel like I'm being asked to fund someone's dream.
The reason for this is simply that entrepreneurs have been conditioned to frame them Offers as a “ask”. In the venture capital world, it's even common practice to name the slide “The Ask.” This puts the founder at a huge disadvantage. No one asks if they can help you make money; they offer to help you earn money. They ask for money when they need it.
Instead of asking a question at the end of your submission, be sure to showcase your offer. What is the difference?
- Don't present your company as “needing” money to achieve something. Use one active tone to launch your company, discuss how you're already on your way to a $1 billion business and that these funds will speed up the process (but you'll get there no matter what).
- Use the trends around you to create fear of loss. If you make it seem like this opportunity will only exist for a short period of time due to technological advances, legal changes, social trends, etc., then this time-pressured investment looks more like a shrewd opportunity than a gift.
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