Capturing Investor Attention Formula: SCIENCE + ART = CAPITAL
Takeaway - it is NOT enough just to be interesting or to have a great product or company. Particularly when your company has hit ‘growth-mode’. You must CAPTURE investor attention with an executable company, and a compelling narrative.
Good ideas get a first meeting. Good ideas paired to a good business get funding. Good ideas paired to a good business with a clear and articulate message get multiple capital offers.
Generally speaking, investors will NOT beat a path to your door. The truth is your greatest competition is indifference and lack of understanding. Investors see interesting investments - every day, every week, every month, for the entire year. Chances are that they will NOT be swept away by the sheer brilliance of your idea. They see brilliant ideas all the time. Investors want EXECUTION, not EXPLORATION.
Your company is being compared to and against several other companies that investors are looking at. Investors ultimately choose the investment that they believe has the best chance of being executed successfully. In addition, this will often be the business that they understand the most. Sounds obvious, I know. However, many growth-stage Founders and Companies that I meet don’t fully grasp how investors really work.
THIS is where the Art and Science meet.
The science part - make sure that your business is in full EXECUTION mode. You have a market, and you are executing on it. You have a business model, and you are executing on it. You have a target customer, and you are executing on it. You get the point. If an investor sniffs ‘exploration’ - exploration of a product, a market, a business model, etc. - chances are that they will seek greener pastures elsewhere. After all, they have plenty of other opportunities to invest in. The key here - METRICS, METRICS, METRICS (and… oh… did I mention METRICS?).
The art part - creating an investment narrative SO compelling, that investors can’t help but notice. A narrative that helps you to stand out among the competition (No, not the competition in your market - the competition for investment dollars!!). Humans engage and remember most effectively when they are learning through a story. That is how we have been learning since childhood. Don’t just give investors dry data and facts. The human brain cannot hold onto dry data as our daily lives are overwhelmed by it. Give them a compelling story. The brain processes stories very differently. A story can help investors learn and gain INSIGHT to your company and your industry. Give them a good story, and they will remember it enough to share it with other investors. THAT is where the magic happens.
Investors Fear Complexity: SCIENCE + ART = CAPITAL
Entrepreneurs and General Partner teams that have a complex product or service (tech, engineering, manufacturing, healthcare, etc) must be deep into their domain. However, it is these same individuals that often have the greatest difficulty understanding and connecting with investors.
The more complex your product or service, the more challenging it is to craft an understandable narrative that will excite and engage potential investors. This is where I often find the biggest gap in communication between potential investors and founders/GP teams. Complex industries often like to cloak themselves in their complexity. They wear it like a shield. This may come in handy for some aspects of the business. However, when it comes to engaging the investment community - leading with complexity is a mistake.. This is the nexus where Science + Art = Capital.
As I have discussed in the past, ‘Capital is Grown Not Raised.’ In order to grow capital, business MUST be in full execution mode, and the opportunity narrative must be compelling and understandable. Enough to motivate your potential investor to act.
Taking the complex, and sculpting it down to its simple essence. This is the art AND science of creating a compelling investment narrative. It's what we do.
If you are a Founder or CEO, what is the next step?
If you are a Founder/CEO and are getting prepared for an institutional capital raise - you probably have a lot of questions, concerns, and potentially some self-doubt right now. Maybe you have a pit in your stomach at the thought of the raise process.
Here is the good news - great ideas paired to a great business are still getting funded. The challenge is to create an effective story. One that investors fully understand and can get excited about.
That is where we come in. We have created several Workshops to help your growth-stage company effectively engage with the institutional investor community.
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