The Three Meeting Gambit
You are raising money wrong
The One Call Close.
Every entrepreneur walks into an investor meeting with the same thought: “This investor is going to LOOOOOOOVVVVEEEE what I am doing and write a check on the spot.”
Unless you have figured out how to spin gold out of straw, that just never happens. (Well, there was this one time, when I saw an investor write an actual check to a founder and tell him he couldnt cash it until he found two others just like it. That was fun.)
Over the years, I have tried many different ways to drive investors to a decision point as fast as possible. Truthfully, thats the goal in any meeting — get to a decision point.
The Three Meeting Close.
Rather than think about meeting investors in single meeting blocks, I suggest thinking about it in blocks of three. At the end of the third meeting, there should be a yes/no decision made:
- They want to / don’t want to invest; (doesn’t mean check — just means the next block of three meetings begins)
- You want / don’t want their money;
The Three Steps to the Three Meetings.
Meeting 1: Intro meeting. 30 minutes.
Prep materials: Understand the type of investor you are talking to. A 6 slide deck.
Walk in, shake hands. Say this: “Thank you for meeting with me. I know your day is smashed, so I have two goals for this meeting. 1) to end it in 25 minutes to give you back part of your day; and 2) If you like what I present, I will suggest a couple of portfolio companies I would like for you to introduce me to. This will give you a bit of due diligence from a trusted founder, and it will give me much needed customer feedback and understanding of how you engage with your founders.”
Keep the deck presentation to 15 minutes. Leave 10 min for questions (most likely you won’t use the deck and it’ll be a Q&A session.)
Ask for intros to portfolio companies.
Ask for next steps and indicate you will follow up within 24 hours as to setting up the next meeting. Make sure the next meeting date includes enough time for you to meet and talk to the portfolio company CEO.
Meeting 2: Follow up meeting. 60 minutes.
Prep materials: Financials. Longer deck. Feedback from portfolio company.
The financials. Most founders have heard how financials for a startup tend to be a guessing game. They are. They are also an indication of how much time you have spent understanding the market; and how deeply do you understand the potential of your company within that market.
Many companies chose a business model / product that create “invisible ceilings” of success. They often can only be uncovered by spending time trying to understand how your business becomes a $100mm business within 5 years. The biggest mistake most founders make? Understanding the actual Total Addressable Market. Let’s say you have a pet food delivery startup. You put that the pet industry is an $80B industry in your deck as your addressable market. It is not $80B. Turns out that the food portion of the market is more like $8B, and the delivery market is $2B. Much different potential to operate in an $80B market versus a $2B market. Get it right.
Walk in. shake hands. Say this: “My goal for today is to get you comfortable enough with what we are doing to make a go/no-go decision. I would like to focus on the go-to-market and financial plans so you can see the same vision I see.”
Dive deep into the company. Spend as little time as appropriate on the product. Founders have a tendency to over index on the product during pitches. Remember in the Market, Team, Product evaluation matrix, product is last. Stop spending all your time on the awesome animations on the third screen. Spend all your time on how you will rule the world.
Meeting 3: Shit or get off the pot. 60 minutes. (Hopefully this is a partner meeting)
Prep materials: Whatever the investor asks for (within reason).
Walk in. Shake hands. Say this: “My goal of this meeting is for both of us to come to a decision as to whether we should move forward or not. What questions do you have for me that will help you get there? I have a few on my side as well.”
If its a partner meeting, this is similar to the first meeting — product demo; financial, etc.
Sometimes it takes more than three meetings, but that should be the exception. Remember that fund raising is a time suck and just sucks, so be directive. If it feels like momentum with an investor has stalled, call it out. Find out if they have cooled on potentially investing in you, or if they are distracted. If that is the case, bail out. Don’t waste time with people who are wasting your time.
Remember — if an investor wants to invest in you, it shouldn’t take a bunch of meetings. Three is enough to get to the yes/no.
Drive the process. Be goal focused. And, if you want the Cadillac Eldorado, just remember that coffee is for closers.