By Jón Ingi Benediktsson, Business Accelerator and Investment Manager at Accelerace. Originally in Danish, published by TechSavvy.
How do you sell your idea well enough for investors to want to spend their money on it? Many people believe that the good sales pitch or elevator pitch contains a lot of technical information about the product, market size, competitors, budget and action plan. But what many aspiring entrepreneurs often forget is that the good pitch is about the good story.
We are all dependent on the mobile phone, meaning we are all constantly bombarded with information. We have never felt busier, and we are always on the move. This is also the case for investors. If you need their attention, it is about capturing it with an interesting story. However, giving a long and unstructured talk about spreadsheets, product data and evidence of why your idea is the best in the world, is not how you do it. After all, people want to be inspired and engaged. This goes for the investors as well.
Now you are probably thinking it sounds like some humanistic nonsense. But I guarantee you it is not. Strong narratives are engaging, and good stories touch our hearts. This has always been the case, and it will be in the future as well. Just think of the Bible or the Qur’an, both of them are defining the worldview of millions of people. As recipients, we are not at all the rational creatures we think we are.
At the same time, many entrepreneurs believe that early-stage investments are primarily based on numbers and documentation, but when it comes down to it, emotions play a huge role. Of course, the factual and rational sides of it are important, but investors are largely controlled by their gut feeling – they see the vision and the person who seduces them. Just keep in mind Elizabeth Holmes, founder of the diagnostics company Theranos and, until years ago, described as the most successful entrepreneur in the United States, raising millions of dollars in funding. In that scenario, the investors were greatly seduced by her dream and her persona. Unfortunately, it turned out afterwards that they should have done their homework better because the technology behind her product did not work at all.
But what does a good story contain?
First and foremost, it is all about finding out what problem you are solving. You need to let your audience know what need you are fulfilling. You may use sources and references to substantiate your claims, but just as importantly, you need to use yourself as an example – you need a narrative and a relatable story that is easily explained, and which lets your audience mirror themselves. It can also be an honest and deep desire to make a difference to a certain group of people that you feel special sympathy for. Whatever your story, you need to dig deep and find it so that investors understand what your motivation for standing in front of them is.
Next, it is about letting the investors know how your business can solve the mentioned problem and why you are needed. They must immediately understand what your idea is all about – and what your dream and ambitions are. Keep it simple but remember to mention that you have talked to potential buyers/end-users who confirm that your solution makes sense. At the same time, tell the investors what makes your team the one with the best set of skills for lifting the task. Tell them that Per is the man with the vision and how Hanne is phenomenal at keeping an overall understanding of the situation, while Christian has interesting contacts and great business understanding.
It may sound easy: a narrative with a problem and a solution. But, of course, it is not that simple. You might have created the most well-composed narrative about your business, but if the investors cannot feel you, your team and your passion, none of it matters. It is the way you narrate the story that makes people listen to you. It is not only about what you want to say, but also about how you say it. You have to believe the story yourself, and the investors must feel and see the firing desire burning in your eyes. They have to know that you are an untiring worker who will work until the sun rises to succeed.