Let’s be open. I am not going to make up my mind about investing in your startup after just one meeting. And, I definitely am not making my decision wholly based on looking at your pitch deck.
I like to do my own homework. So I think of your pitch deck as only a starting point. After I have met you I will spend some time describing what it is I think you do for myself. I will state the problem you are trying to solve in my own words. Once I feel I understand what you do, I will spend a lot of time trying to understand why your customers would care. Does it save them time? Does it make them safer? Does it make them more money? Does it make them happier?
After this I want to understand if there are alternatives to the solution you want to bring to market. What will people do if they don’t adopt the solution you have developed? I know. You have no competitors. Still, I need to confirm that for myself. If what you are doing is as important as you say it is, is it possible that no one else has thought along the same lines as you before now? May be they failed. That is fine. I just need to study and understand what happened. Doing so will give me a better sense of the biggest challenges you might face given what we know. Things change. Technology. Competition. Preferences, and tastes. Regulations. But, at least we would have a historical guide to refer to. I am not wedded to history, nor do I think history has to repeat itself. Nevertheless, I’d still like to know what steep hills and sharp corners we might encounter.
Next, I want to get a sense of how much value people assign to the solution you have developed. Is their perception of the value high, low, or somewhere in-between? I want to understand if they will perceive that its value increases the more they consume it, or if they will feel that it has less value the more they consume it. I don’t want to invest in a startup whose customers feel that they get decreasing satisfaction value from its product as their cumulative consumption increases. It may be too early to know the exact pricing for the product, but I want to gain a sense of the dynamic that might develop around how you price your product and how the market responds.
Then I’d like to get a sense of just how big you could get. Is this an opportunity that is purely domestic? Why? What prevents you from getting bigger? Are there regulations that prevent you from expanding? Is the barrier cultural? If there’s a barrier how might we overcome it once we start gaining traction and have overcome the growing pains that your startup will encounter?
But this is all preliminary due diligence that I will do before I determine if I want to proceed with further discussions. So here’s how you can help me.
Surely there’s some research that you read while you were in the planning stages, before you committed to actually building your startup. Share it with me. If there’s a website that covers the area in which your startup will be focused, send me the link. Send me enough information so that I can be more efficient in finding answers to the questions I will be thinking about as I engage in my internal-debate about the merits or demerits of an investment in your startup. It will move things along faster.
I am not asking for anything confidential, just public information. I was studying a startup doing something really unique related to a device billions of people use. Its technology could also be used by the businesses that serve content to those devices. That mode of content delivery has exploded as these devices have become more powerful.
After our first meeting, I dug around on Google and found two great research reports from Oracle that answered the most important questions I had been thinking about. It took me a few hours of searching the Internet, and reading through some other crappy material before I found that report. Of course I was delighted, and then I asked myself why the entrepreneur did not simply send that, and possibly another one – a report that’s published by Qualcomm every year – to me. Those two publications answered all the initial questions I had, but it took a few days before I found them, read them, and got all the answers I felt I needed.
What would I do if I were you? Prepare a draft email that you can send potential investors1. It would look something like this:
Dear Brian:
Thanks for meeting with me to discuss my startup. I look forward to hearing from you once you decide on next steps. I have attached a copy of our investor presentation. I have also included some links to publications and articles that will quickly help you find independent data and information about the problem we are solving and the potential for us to build a profitable business doing so.
1. The Problem
1. Link #1
2. Link #2
3. Link #3
2.The Competition
1. Link #1
2. Link #2
3. Link #3
3. The Customers
1. Link #1
2. Link #2
3. Link #3
4. The Market
1. Link #1
2. Link #2
3. Link #3
5. The Technology
1. Link #1
2. Link #2
3. Link #3
I hope you have more questions after you have had a chance to study the information that you will find there. I’d love to discuss your questions and give you a better sense of how we have interpreted the data and the information that we have studied so far.
Entrepreneurial Founder
This email should sit in your drafts folder, so that you can copy and paste it many times. Send it to every investor that you meet. Your goal is to help me see things the way you see them. At the end, I might disagree with you anyway. That is okay. But, at least using the approach I have suggested, you helped me gain perspective based largely on some of the same information you have relied upon up till now. You are now better positioned to try to interpret data and information that I might have misunderstood simply because I do not know the topic as intimately as you. In other words, you are more likely to succeed in walking with me as I try to make the intellectual journey that you and other people with whom you are building your startup have presumably made numerous times already.
A calculus textbook I owned in college2 had this Chinese proverb inscribed inside the front cover:
I see and I forget. I hear, and sometimes I remember. I do, and it becomes part of me.
Notwithstanding your list, I will still do a lot of research on my own. The difference is that thanks to your email, I will know what to look for from the outset. That means I can spend more time thinking about your startup and your team, and less time reading crappy research reports. All else equal, that ought to tilt the scales in your favor.
- Katie Smith Milway describes The Art of Irresistible Emails at HBR ?
- I still own it. I know exactly where it is ?
