As I have pitched investments to angel investors, I have found three things that attracted their attention and helped close deals. I call them the three shows: show up, show enthusiasm, and show humility.
In 1995, I started trying to attract outside funding for my company. I wrote countless letters to investment firms, brokers, and bankers without getting a single response. Then in August of 1997, I heard about the San Diego Software Industry Council’s Software Investment Conference. The application deadline had been months earlier, and I was frustrated. When the 1998 conference came around, I submitted an application and was promptly rejected in the first elimination. However, I attended the conference as a guest, read the entrepreneurs’ business plans, watched their presentations, and observed their booths.
In 1999, I applied again and made it. Apparently I had learned enough to make the difference between being thrown out and being allowed in. The coaching from angels and other conference partners helped greatly, leading to a better presentation. And the angels came on board – all because I kept showing up.
Our company’s software products help government agencies do their job more efficiently. Our customers are on the bottom of the information technology food chain and they are used to dull sales presentations. So when I come in, I spice things up for them. During my presentations I focus on a few of our features that automate time-consuming tasks, and I show how they are done in seconds at the push of a button. When the audience oohs and aahs, I exercise my Toastmasters skills, raise my voice, and yell things like “Isn’t that cool?” Invariably our customers tell me that mine was the only presentation they remembered.
Likewise, when I write a business plan, formulate an elevator pitch, create a presentation, and give my eight-minute speech to potential investors, I have found I must be enthusiastic. And no, I didn’t say look enthusiastic. It is important to genuinely believe in your product and love what you do, and this enthusiasm must be conveyed to others. If I’m not excited about my company, it isn’t going to go anywhere, and no investor wants any part of that. I have put my big ideas, plans, products and company through a “spunk test” with my team and advisors and don’t present them if they don’t pass the test. My company is no Yahoo! or Google – it’s just a small software company where a lot of employees, including me, like their jobs. Ultimately I found the first angel investor because I showed enthusiasm for what I was doing.
Undoubtedly, I am like you. I know more about my product, my service and my company than anybody in the world. The total and ultimate expert is me. I write the business plan, show the projections, and create the presentation slides like an authority. Okay, I cut a slight corner on the income and expense chart, but it looks like a hockey stick and that’s all the investors are going to see. I feel good about my presentation.
I am sure that some of you have also had this next experience: I walk in and do my spiel. It takes eight minutes. I have it down and deliver it perfectly. When it’s over, the panel picks it apart for thirty minutes. They zero in on the income and expense chart as if they smelled that I cut a corner. I feel irked. My ego bristles.
It was hard to do, but somehow I recognized that I needed to listen to their questions, criticisms, and suggestions. These people can zero in on an entrepreneur’s shortfalls quicker than you can finish a short sentence. Through my presentation sessions, I have learned that investors want a coachable CEO. They want to know that the person running the company understands that he does not yet know it all, that he will listen to and act on advice, and that his ego isn’t bruised every time someone points out a flaw. There will be many flaws in execution as the newly funded company expands and hopefully thrives. Being the fundee was sufficient evidence that I didn’t have all the answers yet, and I am certain that my investors came on board because I showed humility every step of the way.
My experience tells me that if you are serious about attracting angel investment, you must have a good plan, you must have a market, and you must have the skills to effectively execute the plan. But above all, you must show up, show enthusiasm, and show humility.
© 2005 Ewing Marion Kauffman Foundation. All rights reserved.
Norbert Haupt Founder and CEO Controltec, Inc.