In today’s world of crowdfunding and other innovative ways to raise capital, Americans have more opportunities than ever to invest directly in entrepreneurial start-up companies and privately held small businesses.
Recently enacted provisions of the JOBS Act of 2012 now make it easier for growth-stage businesses to go public, raise capital privately, and stay private longer. (You can find balanced summaries of the many JOBS Act details here and here. Pay particular attention to Title III, which is intended to provide startups and small businesses with less expensive capital through relatively low-dollar offerings of securities. Companies can raise up to $1 million in a 12-month period in offerings through registered broker-dealers or crowdfunding portals.)
What does this mean for communicators?
Storytelling is more important than ever, and business owners need to polish their “elevator pitches” – succinct, compelling presentations that outline ideas for projects, services or products.
A short elevator ride or cocktail party might not be an ideal forum to present the value proposition, market opportunity and possible investment return of your business. However, such gatherings are often the genesis of the investment process or other collaborations. For this reason, every business owner should be ready to communicate key details briefly and with conviction – especially if you need equity or debt capital.
After more than 30 years in investor relations and financial communications, I still appreciate a well-constructed elevator pitch. And, I remain surprised by how seldom I hear someone who actually has one, and can deliver it well. Business owners and executives often wander off point, and lose their opportunity in the process.
An effective pitch includes but is more than “who, what, where, when and why.” A good pitch also covers most of these points:
- How do you make money, or generate an investment return?
- What problem does your product or service solve?
- Who are your competitors?
- How is your offering different from the competition?
- What is the size of the market opportunity?
- How do you measure your near-term catalysts and long-term milestones?
- What challenges does your enterprise face?
- How would additional capital improve or accelerate your success?
Opportunities to pitch your business can’t always be anticipated or planned. But when you can plan a presentation, don’t forget these details:
- Know your audience. Customize the pitch accordingly for an angel investor, portfolio manager, research analyst or even a news reporter.
- Through networking or social media, identify an internal advocate or champion.
- Rehearse, rehearse, rehearse until the pitch is natural and conversational, not robotic or canned.
- Don’t feel compelled to produce a slide deck. Investors suffer from slide fatigue. Consider other handouts.
- Don’t panic if you’re thrown a question you can’t answer. Say so, and follow up as soon as possible.
- Be realistic. Don’t expect to leave the forum with a capital commitment. Your objective should be to secure another meeting.
- Remember, you have control. If the funding source isn’t the right fit, say so. Candor saves you all time.
Armed with substantive and focused elevator pitches, business owners now can tap pools of investment capital that are broader and more accessible than ever before.
– Gary Sharpe, principal/founder, Sharpe Capital Communications
Gary Sharpe (firstname.lastname@example.org) is principal/founder of Sharpe Capital Communications, a Maryland-based agency with more than 30 years of experience in providing effective, efficient and affordable investor relations, strategic communications and capital-raising services. Sharpe Capital Communications serves publicly traded and privately held businesses engaged in commercial banking, telecommunications, public utilities, nuclear power technology, electronic and defense manufacturing, venture capital investment, enterprise software, medical devices, and laboratory services.