February 4th, 2008 14:01 EST
You Have to Do All of the Steps - In Order
I had a meeting last week with an entrepreneur who has an idea for building a certain type of computer consulting practice that would generate software that could revolutionize the way in which pharmaceutical companies manage data collection from clinical trials. Now, I'm not an expert in software or the pharmaceutical business. My role is to help entrepreneurs lay out their business structure in a manner that will help them raise capital.
The gentleman began our meeting by opening up his computer and jumping into a Power Point presentation. I stopped him. I told him that I wasn’t interested in seeing the Power Point just yet. What I wanted was for him to give me a brief description of the concept he was selling first so I could understand what I would be seeing in the PowerPoint presentation.
But when I made him shut down the PowerPoint, he froze. He was a typical presenter who relies on PowerPoint as a crutch rather than as a supplement to the story he should be telling.
In fact, over the course of an hour, he was never able to tell me why this business was revolutionary.
I told him that in order for him to succeed in raising capital he would have to be able to provide a crystal clear explanation of why his software was great. If he couldn’t do this, his software would end up looking like nothing more than a solution looking for a problem.
Products like that don’t get funded.
I explained to him how he would need to craft his story so that it would be attractive to investors. I also told him that a similar description would have to be developed not only for buyers of the software, but also for the strategic partners with whom he might collaborate in the future.
He was excited about the ideas I shared with him and left to think about how to proceed. But then he called me the following week and said that he’d decided that he didn’t want any help in constructing his story - that it was already crafted within the Power Point presentation. He also said that he didn't believe that he needed any help in defining himself as an expert in creating pharmaceutical software.
What he’d really wanted, he said, was introductions to investors. He believed that if he could get in front of a few investors, he could do the rest. Everything would come up roses. Unfortunately, having met with hundreds of entrepreneurs every year and having raised tens of millions of investor dollars, that’s not my experience.
You only have one chance to convince a prospective investor that you’re doing something exciting and worthy of their funding – and if you can't articulate that in ten seconds, you’ll lose their interest.
So, as you are working hard every day to build your company, or as you're building your career, the bottom line is this: you get one crack at the gold ring. If you’re seeking capital, do something that's big and exciting – something that people will want to get behind. Make sure that all your ducks are in a row. Don't underestimate how important duck number one, two and three are, because if you start at duck number four, you're going to fall on your face.
About Joel G. Block, President of Growth-Logic, Inc.
Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker and advisor. To bring Joel into your company, please visit www.joelblock.com or www.growth-logic.com.