Working Smarter – Getting the Deal

Neil Voorsanger


This week I got a distressed call from an old friend, a CEO of a startup seeking to raise millions from investors. He was having no luck. He sent me his business plan and PPT and after I reviewed it, I asked him, “I am curious. You were an outstanding hedge fund manager, yet in your business plan I cannot figure out how I, as the investor, win big?” He answered, “Isn’t it clear from my presentation?”

Herein lays the problem for him, for anyone trying to get a major commitment, and potentially for you: He succumbed to the major failing of proposals – if I can’t explain to myself how I win, I don’t commit.

Despite his best intentions, he made me, the potential investor define his value/the return to me. He brilliantly described his business, how it would work, how the product would work but never answered these questions:

1. Why this would be a great investment for me?
2. Why I should invest now rather than later?
3. Why I should invest more rather than less?
4. The possible risks and how these would be avoided/minimized?

Instead my friend devoted 42 PPT slides to an exhausting explanation of his product/service, gave me financials that only went up (from left to right) and when I was finished I still couldn’t answer these basic questions:

5. What is his market?
6. What is his business?
7. What is the product?
8. Why is there a proven need for this product over the available products?
9. How does he make money (i.e. what is the revenue engine)?
10. Why will he be superior to his competitors?
11. Why does he need my money?

If I am the investor and I can’t put into my own words the answers to these simple questions, then I do not have the logical framework for making an intelligent investor decision. As a potential investor I like the entrepeneur but I have to sell his deal to my investors and I can't explain it. So what do I do? I say, “There is great potential for you and I suspect you will be very, very successful. Let me get back to you in about a month.”

My purpose is not to beat-up on a hard working entrepreneur but to suggest that you can craft a wonderful presentation if you:

1. Pretend you are the audience; that is, frame questions you would insist on having answered, and see if your presentation answers them.
2. Present your entire presentation in not more than 15 PPT slides (I held workshops for hundreds of entrepreneurs on how to raise money from VCs and the VCs told me over and over, keep it to 15).
3. Rehearse your presentation aloud in front of a mirror at least 20 times.

How well could I have done? To give you some confidence in my suggestions, next week I will explain how I raised $190,000 in forty-five minutes from Angel investors for a biotech invention that I was not allowed to name or describe (the inventor had not yet patented it).

If you are interested, check in next week.

Should you feel these tips will help a friend or scare a foe, please pass on.

© 2007. Neil Voorsanger. All Rights Reserved.