Raising Capital & Strategy—The Straight Face Test

Your chances of persuading your audience and raising capital plummet if you can’t pass the Straight Face Test, presenting yourself as trustworthy and competent.

So, what do you need to do to pass the Straight Face Test? You need to be grounded, both intellectually and emotionally. Doing one or the other alone will fail.

Intellectually Grounded: Competent

To be intellectually grounded, you need to be rock solid about your business idea, proposal, and plans. That means understanding the high level and the details about your business, including product, market, customers, the 3Cs™, competition, and how you’ll drive success and deal with adversity.

Your company presentation needs to be constructed from an outline business plan and a detailed financial model that’s built from the bottom up, reflecting unit sales that are driving revenues, expenses, and capital requirements. Output reports should include a monthly income statement, balance sheet, cash flow statement, and metrics that are relevant to your business and industry. All three fundraising documents need to be accurate and internally consistent.

Emotionally Grounded: Trustworthy

Emotional response is where most founders make mistakes when presenting to investors. Do you get flustered, scared, or frustrated when investors ask you questions? Even slightly? This will reflect in your facial language and you will fail the Straight Face Test.

Here are some things that you can do:

No Errors: Ensure that your company presentation, financial model, and business plan are error-free and consistent. We find errors in client documents more than 70% of the time—especially in financial models. If investors find an error, your trustworthiness takes a hit. Sometimes it’s fatal.

Know Your Business: Know more than anyone about your product, markets, customers, selling, competition, profitability, cash flow, short- and long-term cash needs, and valuation. You must anticipate investor questions and have answers.

Practice Presenting: First on your own, then to your team. Memorize your entire presentation and what you’re going to say. Why? Investors are going to ask questions and make comments, both of which may throw you off track. You’ll only be able to pass the Straight Face Test and improvise if you know your material cold.

Get Feedback: When you think you’re ready, start presenting to people outside the company. You want people who know the fundraising process thoroughly and can act as an investor, asking you hundreds of questions and grilling you. This is the time to get scared, flustered, and angry so that you are able to address anything that real investors throw at you and pass the Straight Face Test.

Key Point: Practice pitching on your own at least 60 minutes for each single minute of actual presentation time.

Summary

Passing the Straight Face Test requires you to have a deep understanding of your business and error-free documents. It also requires enough practice so that you have your presentation memorized, have answers to questions immediately available, and have worked through most of your emotional reactions beforehand. Doing these things will help keep you on track, allow you to improvise, and present yourself as a trustworthy and competent founder and leader.

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Want to know how you’re coming across to investors, employees, or shareholders? Schedule a one-hour call with us here to discuss your business, presentation, and set up a mock pitch meeting.

Until next week!

All the best,