How to Convince Investors to Fund Technology Startup by Philip P. Crowley, Esq.

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How to Convince Investors to Fund Technology Startup by Philip P. Crowley, Esq.

February 27
20:09 2020

You will achieve little to nothing as a technology innovator unless you can attract investment.

Many innovators with great ideas fail because they don’t know how to get investors to make an investment. Yet, there are proven techniques that can improve your chances to motivate investors to help you reach your goals.

Philip P. Crowley, Esq.

Most innovators need to learn how to bring in external money in order to succeed. Few have the resources to fund everything required to develop a technology and a “go to market” plan without external funding. Is there a “magic process” that guarantees success in all cases?

The short answer is “No.” But it’s not complicated. There are approaches innovators can take that will greatly increase their chances for success. Let’s assume for now, that you have a truly innovative technology with great potential. How do you attract the dollars you need to develop it?

It starts with the initial “pitch deck.”

I’ve seen presentations by too many startup entrepreneurs who seem oblivious to the audience they’re addressing-typically Angel investors or venture capitalists. They launch into a tremendously detailed description of the wonders of the technology in which they are steeped in and leave potential investors to figure out the answers to the investors’ primary concern-how can I make money in this venture?

I had the great opportunity a while back to have a conversation with Dr. Curtis Carlson, former President of SRI International (a leading research and innovation organization responsible for thousands of inventions and technical breakthroughs themselves, and for training many large organizations how better to innovate). He has focused for decades on innovation-how to do it and how to teach organizations how to do it.

I also had the benefit of reading a wonderful book by Scott Kapor, a former business lawyer and experienced venture capitalist. Scott has had a distinguished career in venture capital, as well as serving as President of the National Venture Capital Association and was an instructor in business law at Stanford Law School, among other activities. I’ve adapted some of their thinking into an outline that I’ve recommended to many of my clients and contacts as a more disciplined method for attracting investor interest. It’s not the only way to approach presentations of this type, but I’ll set it out here for your consideration.

The approach follows the mnemonic M-S-T-A-B-C-$. It’s not intended to be a “cookie cutter” approach, but rather a set of principles to be measured by the innovation involved and the audience to which it is being presented.

“M” is for the market for the issue your innovation addresses. How big is it in the United States? … outside the US? What are people doing in that market to address the issue now? What market “pain” are they seeking to address? How much money is being spent? What are the results? Is there a burning need for improvement? If so, why? How do you know? What evidence do you have that there is a need for change?

“S” is for stakeholder. Who are they and what are their interests in the issue? Are there some who would be directly benefited? Are there others who would be damaged in some way by your innovation (through loss of business or otherwise?) Are there insurers or other payors involved? What would be the effect on them? Are any of them potential allies? Opponents? What are the stakeholders doing now to address the problem? Will there be inertia in getting them to change how they do things?

“T” is for team. Who are the people working with you and what unique talents and experiences do they have that are relevant to the Market? Do any have deep technical expertise in the relevant area? Are any serial entrepreneurs in this area? Do any have special connections to people or institutions that can accelerate development or adoption of the new technology?

“A” is for approach. This is how your innovation addresses the issue at hand. Yes, it’s only after the Market, Stakeholders, and Team have been identified that we then speak of the technology. That gives the potential investors the context to know why the innovation can be profitable. And this part of the presentation needs to be tuned to the audience-concise for financial investors, and detailed if presenting to a room full of PhD’s in the subject area of your innovation. It’s essential to key the level of the presentation to the audience at hand. It’s much better to provide an explanation that is understandable to the general public and have the details to respond to questions from the audience, rather than overwhelm the audience with too much detailed data.

“B” is for benefit. Here you speak about the benefits and costs of the innovation.

“C” is for competition. I always smile a bit when I hear an innovator tell me “There’s NO competition. My technology and its benefits are completely unique!” Well, people are doing something in the market to deal with the issue. So, that’s at least one element of the competition.

The innovator has to motivate people to do something new, something different. That can be difficult in areas that are very conservative, like medicine. Systems grow up around doing things the old way and it takes work to help market participants see the need to break old habits.

And, there are other innovators out there as well. They are unlikely to stand still while you innovate past them.

“$” is for specifying a definite amount of money needed and what you will do with it. Investors generally aren’t interested in financing a “science project.” Your aims must be detailed and focused on a near-term achievable goal that provides a result that justifies additional financing (e.g., proof of concept at some level) or starts to bring in revenue (e.g., getting a product on the market). You will also need a timeline for your achievements and one or more milestones to measure progress.

I tell my clients that approach will not get them a check at the end of the presentation. But it increases the chances they will receive an invitation to a further meeting. That’s the real goal.

Available for Media Interviews:

Contact: Jo Allison
Phone: 917-207-1039
Email: [email protected]
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