Let’s say you have a really big idea, one that is a system aimed at a consequential enterprise-level problem and requires far more capital than a standalone product or app. Chances are that you know the lingo of the target market, that you have access to the decision makers, and that you have personal credibility in your chosen space. Perhaps you have many years of relevant enterprise experience. All those factors help you assemble your team, build a good product, and get it to the market.
Now, how do you explain this to prospective investors? Most VC’s and angel investors are generalists in business and financial matters. They may have a focus on a particular space, say Fintech or Digital Health; they may have advisors with knowledge, connections and credentials in their focus areas; and they may have completed a number of successful deals consistent with their strategy. If your idea matches such a category of investing, your hunt for funding is pretty quickly narrowed to those who already have learned enough to appreciate the magnificence of your plan. If, however, your idea is ground breaking and can’t be easily described with an analogy as something like “the Uber of pontoon boats,” you’ve got a tall order ahead of you to convince the generalists.
In the very early Peachtree Software days we had such a challenge. We had to explain the microcomputer, which was often sold as a kit, and sell that as a precursor to the use of our product. The hardware was highly unreliable, and the foundational software on which we depended, e.g. CP/M and Microsoft BASIC, was still baking in the oven of invention. We topped off that stack with our own bugs. We demoed when we could coax the components to work, but we developed two alternatives. Our marketing officer made a cardboard computer that folded flat in a briefcase, and, when opened up, had a slot in the “screen” into which we could insert every display generated by our software. There were no delays and no doubts; it always worked. And, in truth, the prospective customer could see exactly how our product worked. That was sheer genius for the day.
Another of our officers came up with a not-so-serious but quite portable demo. He worked out a routine using finger puppets to talk his way through an entire demo of a dysfunctional machine in front of him. It was silly, but it too made sales. There’s a lot of forgiveness among pioneers selling to pioneers.
Advancing a few decades and now awash in plans and funding deals that could never be condensed into one-pagers, or even the desired 15 PPT slides, I recently came across a demo that was as creative and effective as any I have seen in my career. I visited a logistics software company that set up an entire supply chain using Lionel O-Gauge trains and showed how its software managed the movement of information alongside the movement of materials. Unless you have a very large playroom in your home, I would describe this as an industrial scale layout. As I walked from station to station, I could see screens with the software tracking right along with the scale model goods and properly recording all the steps for posterity. I was instantly sold on the product being developed.
All you model railroad enthusiasts may enjoy a revival of your craft if this technique is copied by others. The 70+ crowd gets to ride again!
Unfortunately, it’s not easy or practical to take a 50 X 25-foot software demo to a show or on a road trip. It won’t help you in a pitch competition or in a direct sales call. You have to solicit enough motivation to bring prospective customers to your shop. Or perhaps you can turn this into a video epic. Watching it on YouTube won’t have nearly the impact of the 3D version, but it’s far more interesting than a series of PPT charts and graphs. It might even be compelling enough to get your buyers to buy plane tickets to your city to see the action.
I applaud those of you who are willing to launch the really complex projects that advance civilization, or at least advance the use of computing power for good purposes. I doubly applaud those of you who can figure out how to explain them to investors and garner the funds necessary to pursue the dream.
Consider some of these suggestions:
As mentioned at the beginning of this essay, your job is much easier if you can find a group of potential investors who don’t require basic education on the nature of the system you are planning to deliver. Curating your prospect and partner list is job one.
If you can build and use a hands-on interactive display where investors and customers can both see your system in action and perform some rudimentary testing of their own, you’ll make a really strong case. I landed one of my biggest lifetime deals when I took a fully interactive system to a show in Washington, DC; it was about the size of a big office desk but showed well. When the EVP of Rupert Murdoch’s News Corp came by, he said: “You’ve got exactly what I want.” Not having any idea what he wanted, I said: “Yes, Sir.” That led to an immediate contract and eventually resulted in our make-the-company deal.
Be certain your demo works reliably. Your software may be pre-release, but your demo should run with precision. Rarely do PPT presentations get off to a smooth start while all the various incompatibilities of cords, connectors, and connectivity have to be sorted out. If your mission is to build a demo to convey a vision, equip it with an “instant on” switch that works every time.
Do not get sucked into being evaluated on one-pagers, or 3-minute pitch competitions. If you can’t capture enough attention to tell a full story, you’ll be left behind by simple products that are optimized for fundraising and not necessarily for functionality. I personally have come to favor fulsome discussions with entrepreneurs about their backgrounds and motivations and about their product conceptions. I’m in no hurry when quality information is being conveyed. If it takes multiple meetings that build on each other, that’s also fine. Drive-by short mentoring sessions or table top exhibits aren’t the formats that help you attack the grand challenges of your field of endeavor. You are highly unlikely to reduce your value proposition to a Don Draper tag line.
Finally, land that first strategic customer that proves that your product works, generates an ROI, and has no direct substitutes in the marketplace. It was easy for me to get wowed by the train layout, but that explained to me none of the up-and-to-the-right market positioning that is so important in complex sales. It gave me no information about pricing and competition. I was predisposed to believe the founder, all the more so when I was told about some of his pilot projects. You can put on a three-ring circus, but nothing is more entertaining that having name-brand customers prove there is what has been coined “authentic demand” by Atlanta’s FlashPoint accelerator. That’s a step beyond “traction” based on a few sales. It’s an imbedded pilot with a customer that quickly becomes dependent on your product.
Shakespeare did not say “Extensivenessis the soul of wit.” But, it surely can be the soul of great funding decisions.