It’s in the business, stop telling me about your tech

One recent screening session for the Westchester Angels someone presented to us a retail wind turbine concept that I think may warrant investment.

But there was no way to tell.

So, he didn’t get funded.

Here is why and how to avoid his fate:

As good as the core of his idea may still be (I don’t know by the way), there is no way his company is going to raise any money.

He could not explain to us the problem he solved or why anybody would be interested. So, none of us could figure out how we would ever make any money. So none of us were interested in investing.

His pitch was a technical explanation of the intricacies of his product design. He spent a full quarter of his time (2 out of 8 minutes) on ball bearings!

As a rule of thumb any time your initial pitch to early stage investors includes information on the metal used to manufacture ball bearings, or the structure of your data tables, or how data flows, stop — you are doing it wrong.

I asked him what problem he solved for the market and he answered “either turbulence or the cluster effect”.

And then he referred me to the appendix of hhis 100 page slide deck so that I could figure this out for myself.

From an investor point of view the problem he was solving had nothing to do with turbulence or the cluster effect. Nobody in the retail market woke up in the morning thinking “hey I am worried about the cluster effect of wind turbines that I don’t have”.

And, if I have to go to an appendix in your deck to understand the problem because you can’t explain it to me the conversation is over.

Yet, I persisted. Self loathing I suppose.

After much prodding and time on the phone I figured out that the real benefit was low cost sustainable electricity in areas that were not appropriate for solar but potentially appropriate for wind.

His small footprint wind turbines could be installed in clusters on rooftops like solar panels.

That sounded interesting. Interesting enough to invest? I don’t know, but certainly interesting enough to test.

But when I suggested to him that he tell that story and offered another chance at screening he balked. He couldn’t tell the business story, he said, because he couldn’t fit anything more into his presentation.

I told him to toss out all of the technical information and focus ONLY on the business story. His audience only cared about the business story.

He wouldn’t do it.

I gave up.

Yes, at some point the technology matters. At some point investors will do due diligence. At some point they will want to make sure the technology works. Technical people will delve into the details.

But that isn’t where you start. Investors have to understand the business side of your investment, you have to engage them in your business, not inform them of the details.

You must show how you are going to make money.

In the first stages of conversation with investors the technology doesn’t matter. The business proposition matters.

So, take a look at your pitch. Is the business story clear? Can you explain where you make money? Will investors who don’t share your background be excited by what you are offering?

If not then don’t expect them to write checks. Go back, get your business story right then start the conversation.

After sitting through a thousand pitches and liking about a dozen I thought I’d start sharing some of the lessons I have learned. I help companies develop BrandStories and I help startups craft investor pitches.

Download my pitch guide and learn more about how to prep for investor pitches here.

Learn about BrandStories and effective communication to grow your busness, here.