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Think like an investor

May 09, 2011

Think like an investor

Peter Evans speaks at Entrepreneurship 101

Wondering how you can think like an investor?

While most entrepreneurs who seek financing are worried about “Getting to YES”, remember that most investors have heard so many pitches, that their mindset is actually, “What’s the quickest way I can get to NO?”

Peter Evans, a MaRS advisor, for IT, communications and entertainment, has had a career in venture capital and worked with both early stage start-ups and publicly traded companies.  At MaRS, he specializes in working intensively with entrepreneurs as an investment pitch coach.

Evans offered a comprehensive and concrete guide on how to craft a pitch that gives you a better chance to deny investors their wish to say NO. Understanding investor psychology is paramount in this aim.

To an investor, the right investment has attractive features like:

  • A ready market
  • Solid IP and/or competitive assets (proof that you can fend off the competition)
  • Traction (proof of early customers)
  • An excellent team (evidence of team members skills and your ability to lead)

The successful pitch should engage the investor at three levels: the heart (emotional judgment), the mind (rational judgment) and the wallet (financial judgment), Evans said.

His ideal “boardroom setting” pitch might last 10-12 minutes and communicate the following:

  • You solve a real problem (3 min)
  • You serve an attractive market (4 min)
  • You have unique advantages (3 min)
  • The financial details of your offer are compelling (2 min)

Evans went into detail on multiple facets of these four dimensions and all his points bear watching (check out his video below).

Although you’d do well to prepare your presentation along these lines alone, Evans recommends that you also be ready for audiences that fixate on one dimension of your pitch more than others. Your slide deck should be flexible enough for you to move back and forth to deal with the unpredictability of questions you may face.

Ultimately, Evans said, there are seven key signals you need to send to investors:

  1. Honesty
  2. Credibility: Are you a thought leader or pioneer in your category?
  3. Resourcefulness: Will you use the money wisely?
  4. Logic: Are you wise, pragmatic?
  5. Passion: Do you have an ability to excite? Without this most pitches will fail
  6. Humility: Are you coachable (i.e. will the investor be able to help you with input)?
  7. Leadership: Can you attract and lead a winning team?

Downloads and resources:

Entrepreneurship 101 2010/11 – The Pitch from MaRS Discovery District on Vimeo.