We are almost there and if you are fund raising for your startup this is the most important question you need to answer: “What’s in it for me?”. You are asking me to give you something and what do I get back in return. I repeat, it is the most important question for an investor. Forget the impact and all the good things you will be doing for the world, unless you are a social entrepreneur dedicating yourself to none profit and social activities; all other activities are classed as a business with the objective of returning a profit. The question that you need to address is how will you provide a return on that investment.
It is a simple
and yet a difficult question. Many startups will not be profitable for years and in fact for many of the unicorns the model is not profitability but growth; measured in number of users, interactions, impressions and other relevant metrics. However for the rest of the 90% of startups I think profitability is key. We all dream of growing our user numbers and one day making a killing on advertising but those days are getting harder and harder I would say. Yet I am not here to talk about your model, rather I want to express the importance of making sure you provide CREDIBLE answers to what is the most important part of your pitch.
Now that you have told me about your Experience and Expertise and gained trust. Now that you have told us about The Problem you have encountered and How and Why you are going to fix it; now it is time we look at the numbers so I can see “What’s in it for me?”
In order to answer this last question. You need to answer the following questions?
- How much are you asking me to invest and what do I get in return (shares, convertible notes, how much and deteails)?
- HOW and WHEN will I get my money and a Return On my Investment (ROI)?
- HOW:
- By becoming profitable and pay dividend
- By making the company attractive to buyers
- A combination of both
- HOW:
- WHEN:
How long am I locked in for. 2, 5, or 10 years? This is key, for decision making and I have explained this before. Different investors have different time frames and windows for getting their ROI. This time frame must match investors’ investment thesis and expectations. Of course you can never tell who and when someone will offer to buy you out, but you can spell out your expectation and objectives or vision. Afterall that’s all we an investor is doing. Investing in you and your vision.
You just need to be honest, clear and direct. Not everyone will invest in your business. So if you make it vague to try and please everyone you risk the chance of LOSING THEM ALL, but if you make it crystal clear you will catch a few of those investors amongst the hundreds that you pitch to.
Great. You are almost there on building an awesome pitchdeck for your startup. In the next post we will speak about the finishing touches; The Impact of what you and what it will do for the humanity or society at large.
Too busy with your startup day to day work and not sure how to convert your pitch into a great story? Give me a shout. Book a 30 minute free call with me and I can give you some hints.