What is one ride that every carnival has? The one that stands out from miles away in the night’s sky, with glimmering lights and fun sounds? The last hint is that the first one was built in Chicago, IL.
My company is slowly running out of money again. It is the ongoing struggle of starting a startup when the incoming revenue does not meet or even exceed the outgoing expenses. This situation, unfortunately, means that it is time to raise money yet again.
I had a conversation with my co-founder about how I could raise better, or faster this time around. For context, I tried to raise this round of $500k back in January. The result was a significant amount of interest and intrigue, but little conversion to investment dollars. Since then, I have been racking my brain about why I was not able to raise. I have analyzed, and microanalyzer each part of my pitch, about my product, my financials, and market size, and have been coming up with no apparent weak spot. My co-founder said that the pitch is fine, “you have improved greatly in the pitch, but I still have not seen you put effort into getting comfortable with the numbers.”
The numbers, there were a lot of them. The financial figures in the deck, what did they all mean, how were they going to work as we scale, unit metrics, and all. Then there are the other numbers, the investment and the ROI. On calls I had with potential investors, I would lean on my co-founder to answer those questions because he had a background in finance. But now he is saying it is my turn, “you are the CEO, if the investors can’t believe in you talking about the numbers then they will not feel comfortable placing their money in your pocket.” Well, that does makes sense, but where to start.
After thinking about this problem for a while, this week, I finally made a plan and started to take action.
Goal: To be able to confidently walk through the numbers in the model and the investment opportunity with an investor
Action Items
- Read books investor book and angel book
- Write out a script and scenarios of ROI
- Find someone in the VC community to grill me for an hour a week for five weeks
This week I started attacking the investor books. I am a visual learner, so when I read, I often draw diagrams or write notes while reading. After 162 pages into the VC handbook, I finally understood their perspective and investment. Investors want to get in early on the ground floor, ride the ride for the ups and downs and all-around a then get off at the top. It hit me; it’s just like a Ferris Wheel.
This concept may be simple and understood by most, but for me, everything finally clicked. I get it now, and I get what my job is; to sell investors a ticket to ride the Ferris Wheel. Among all the other rides at the carnival who claim to get as high as the Ferris Wheel, none do. I need to position my startup as the company that stands out from the rest and goes the highest.