The worst investment pitch ever
Ever pitched a film or TV programme to a producer? No? Me neither. I wouldn’t know where to begin, or who to contact. I don’t know anybody in the entertainment business. I don’t know the sorts of things that they would be looking for, the questions they would ask, or areas of special interest to them. So even if I had a knock-out script, it wouldn’t get anywhere. I think of raising investment finance in much the same way. It’s surprisingly easy if you’ve got the right contacts, and surprisingly difficult when you don’t.
It’s getting the meeting that’s the really hard part of starting a business, but once in front of the right people, it can all happen remarkably quickly.
Here’s a perfect example. I once made what must have been the worst investment pitch ever to some executives in British Oxygen Company. A colleague and I were pitching a ‘fizzy’ drink that used oxygen instead of carbon dioxide. It was an idea from a couple of young scientists in the lab that I worked in. The trick is in the delivery system, and they had come up with a prototype using a can of hair-mousse. At the time, BOC were looking for new product ideas. Looking back I can tell how nervous I was because after meeting my colleague in a cafe before going to BOC’s headquarters I left the four sample prototypes that I was carrying in a plastic shopping bag in the cafe and had to go back. While we waited in the reception, I took the opportunity of going to the loo. It was winter and I had an overcoat with a hood. I hung the overcoat by it’s hood over a spare toilet roll that was hanging over the coat hook. After finishing up, I grabbed my coat and headed off to meet the BOC team. While being led into a meeting room, one of the executives asked if he could take our coats. When I handed him mine, he pulled out the toilet roll from the hood and asked – deadpan – ‘Do you want to keep this?’ I can’t recall much after that other than the three executives all taking a drink from the prototypes and saying’ ‘My God! They’ve done it’, and shaking hands on a £70,000 investment then and there. As I say, you’ve got to get the right meeting.
Once you’ve got the meeting however, the outcome depends almost entirely on you. I don’t care if it’s a TV programme, or a new business, people are investing in you. If you’re not credible, you’ll not make the sale. However, as the example above shows, being credible does not need to mean, smooth or assured. People see through that sort of thing pretty quickly. So allowances are made about how you look, sound and behave but, above all, you must know what you’re talking about and come over with energy and enthusiasm. Investors know your business plan is meaningless. They’ve already decided the market opportunity is interesting (or they wouldn’t have taken the meeting), but they need to know that, when you hit the inevitable problems, you’ve got the resilience and ingenuity to navigate through.
So, how do you get the meeting in the first place? Contacts. You have to work hard at networking. And it’s personal. By all means, send in your business plan, but that won’t work. You have to get hold of contact details and hit the phones first. Then you can send your business plan. For this you’ll need your elevator pitch. What’s that? It’s the description of your business you give when someone standing next to you in an elevator asks you what you do for a living. If you can’t tell them by the time you reach your floor, you don’t really know.
And there we have it. That’s why raising finance is exactly the same as pitching a film or TV programme. It’s about who you know, darling. If you have the contacts, and can get your calls returned, it’s easy. For this, you need either to have worked in the industry before, know someone who has, or have built these contacts up from previous experience. In other words, it’s remarkably difficult, because few of us have any of this.
There are however a small army of advisors that buzz around potential entrepreneurs (they’ll be the people you meet most frequently at conferences). Judge them by their network. Think of them as a talent agent. If they can get you a meeting, they’re ok. If they send you away with a list of things you need to do, either they’re no use, or you’re not credible.