They say it takes seven touches to close a sale – so it takes seven touches to close an investor. Some startups pitch to a group of investors and if they don’t see checkbooks coming out at the end, then in their mind it’s a failed meeting.
I tell the startup, the investor doesn’t yet know if they are interested or not – they’re still trying to figure out what the deal is about. It takes four updates before the investor gets a sense of the deal and can start to form a decision.
In the end the investor makes a decision based on team and traction.
In the introduction, you can talk about the market size, growth rates of the industry, and the promise of a great outcome. After that first mailer, the investor doesn’t care to hear any more about the market, or growth rates. They only care about one thing – what are you doing to achieve the promise?
Your mailers need to showcase the strength of the team and the progress you are making on sales, product, IP, and fundraise. To make your case, you need to include numbers in your deck and updates. It shows you know your business, your market, and your status.
I’m amazed at how many startups don’t know their revenue numbers.
Come prepared to share those details with the investors in mailers and follow up conference calls.
One tactic I’ve seen used to good effect is to go to your investor prospects six months before launching the campaign. Tell them you will start your raise in six month and then ask if you can keep them informed of your progress.
This gives you six months to educate the investor about your deal and demonstrate progress so when you are ready to launch your fundraise, you have a group of educated investors ready to go.
Hall T. Martin is the founder of TEN Capital and a builder of entrepreneur ecosystems by startup funding through angel networks, funding portals, syndicates, and more. Connect with him about fundraising, business growth, and emerging technologies.