How to raise capital…

This guide is based on Mixergy’s course with Oren Klaff.

Oren Klaff saw that entrepreneurs who make lame pitches can’t raise capital, so he used his experience helping to place over $400 million in capital to write a book about how to pitch. It was all done with effective pitching strategies, so we invited him to teach you how to do it.

Oren is the director of capital markets at Intersection Capital and the author of Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal.

Here are the actionable highlights from the course.

1. Recognize your own value so you’ll have confidence

An analyst was asking Oren lots of nitpicky questions, but Oren viewed himself as the prize of the deal so he had the confidence to turn the questioning back on her and ask how she added value to the deal.

Take Action:
Think of yourself as a prize that investors have to compete for, and don’t feel you need to beg to get funding.


2. Start with big ideas to set the context for your pitch

Oren was raising capital for people who built protective ecosystems in Peru, and he started the pitch by saying that to save humanity you have to solve big problems like climate change, pollution, and species loss, and that species loss stands out because it’s irreversible.

Take Action:
Before you mention your product, talk about the big ideas that motivated you to create your product and point out the problem you want to solve.


3. Compare solutions to the problem to show that your product is the best one

Oren recommends describing a generic solution, listing your competitors’ solutions, and then introducing your product and explaining how it solves the problem.

Take Action:
After you’ve highlighted the problem you want to solve, compare your product with other potential solutions and show that you’ve found the right way to address the problem.


4. Reveal your project’s stage upfront to save time

Oren says that one entrepreneur should have disclosed his project’s stage at the beginning of his presentation, but he didn’t so he had to face questions like “Are you profitable?” after going through an hour-long pitch.

Take Action:
Start your pitch by talking about project details like how much money you’ve raised, how many employees you have, and how much revenue you earn.


5. Negotiate with multiple investors so you won’t have to accept unfavorable terms

Oren recommends meeting with several investors, narrowing the field down to three who are seriously interested, and negotiating with those three simultaneously, because if one insists on terms you don’t like you can sign a deal with one of the others.

Take Action:
Negotiate with at least three investors at the same time, and don’t talk to one investor exclusively before you close a deal.


6. Set a time limit to show you aren’t needy

Oren says that entrepreneurs who pitch to a hedge fund intake committee should limit themselves to an hour, but some of them talk for three or four hours and it looks like they have nothing else to do.

Take Action:
Establish a time constraint at the beginning of a meeting with investors, and give your pitch in 20 minutes.


7. Create and resolve tension to keep investors listening

Oren suggests that an entrepreneur could say, “I’m not sure we’re going to work well together because you might want us to over-focus on products” to grab investors’ attention and then say, “But having some guys who are so focused on products and engineering combined with our business development skills might be a good thing!”

Take Action:
Create tension by bringing up a possible conflict with investors, then resolve the tension by giving a reason the conflict won’t occur.


8. Save interesting points for later so you can use them to win investors’ attention

When Oren pitches for a genetic testing company, he mentions that it tests athletes late in the pitch because that’s a novel point and it brings back investors’ attention.

Take Action:
Think of some new and surprising things your business does, and talk about them at the middle or end of your pitch if your audience seems to be losing interest.


Want to make sure you get results?

Written by Sarah Brodsky, based on production notes by Jeremy Weisz

  • http://www.mobileapptycoon.com/ Thomas @ Mobile App Tycoon

    These are some great tips that I wouldn’t have thought of!  I haven’t had to pitching anything to investors yet, but if I do I’m definitely going to check out Oren’s book!

    Thomas

  • http://twitter.com/GeoffreyBarrows Geoffrey L Barrows

    I read his book (fun read!) and listened to both interviews here- This material is useful for more than just raising capital.

  • http://mixergy.com Andrew Warner

    Thanks.

    So how do you use a cheat sheet like this if you already read the book?

  • http://mixergy.com Andrew Warner

    I think his book is one of the best ones out there about how to negotiate.
    The section on ‘prizing’ alone is better than whole bookcases in the Barnes & Noble business section.

  • http://twitter.com/alexisvos Alexis Vos

    I ordered the book last year after seeing the interview here. loved it, a great and very informative read.

  • Martin S.

    Joined Premium because of this course. (Even though I hardly get enough time to watch anything these days)

    Helped me a save an utterly screwed up group presentation; we ended up with a happy client.

  • http://mixergy.com Andrew Warner

    How’d you save the presentation? How did I help?

  • http://twitter.com/GeoffreyBarrows Geoffrey L Barrows

    Trying to give a short answer… Actually I think it’s hard to capture the essence of Oren’s material without reading his book (and watching the interview, so you hear the energy he projects). To me, the material was really about framing, prizing, and the croc brain, with all the other tactics really icing on the cake. Speaking personally, I’m not seeking investor money, but I am trying to arrange a variety of deals. And given my temperament (more introverted and often self-doubting in spite of it all), the topics of framing, prizing, and eradicating neediness were real eye openers, and in direct opposition to some long-running habits. So the best “cheat sheet” for me was actually his prizing scripts. I did go back and reread sections of the book and re-listened to the interviews though.

    It might be good to edit the above cheat sheet to include framing and the croc-brain.

  • Martin S.

    We were designing a new recruitment website for a large logistics company. I had split up the tasks between all team members, but the resulting work was sub-par, the presentation sounded strangely servile and sycophantic, and we only had about one day left to finish the thing.

    Oren talks about focusing on the big idea first, so I trashed the old presentation and used that as our centerpiece for a new one. Instead of selling every detail of our work, we started with “Look, our target group is students and seniors. Seniors don’t understand complex websites and students just won’t invest the time. If you want to capture this audience, you have to simplify the education process. Here’s three steps to do that your competition isn’t even aware of.”

    Instead of selling every single point, we just had to make the connection to the big picture, and add a little suspense to keep some of the more data-driven slides interesting.

    Even though I wrote the thing in the night before pitch day, it worked out pretty well.

  • http://mixergy.com Andrew Warner

    Clever use of his ideas.

    Thanks Martin.

    I just copied it into the notebook I use in my interviews so I could tell the audience what you did.

  • http://www.twitter.com/bennesvig Ben Nesvig

    His book is so good.