TBC: Convincing Investors During Slow Growth Phases

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Hey guys, welcome to another episode of the back channel. In today's episode, I want to expand on a small interaction I had with a founder who had a question during a fireside chat of ours. Uh, where I was talking to a founder who raised capital and he talked about this road of, of wandering through the desert.

It's like trying to figure things out with his company, trying to figure it out, trying to figure it out. Until finally, he just got a shred of inspiration and finally got investors. To invest in his company in a really big way. Now. Uh, founder in the audience raised, raised their hand and asked a question of like, what was it that allowed you to convince people to invest in your, after a period of time, a long period of time of an actually at least on paper, not showing much progress.

. They were like, well, I've had a similar experience where I've been running this company for a while. I've been growing it slightly. Um, but without being able to attract [00:01:00] investors, haven't been able to grow it much more than that. And now as I'm pitching investors, I get a question about, well, you've been doing this for so long.

Nothing has changed. You've been barely growing. Uh, why is that happening and why should I invest in you? Now the conversation we had is an important one to think about because you need to get into the mind of the investor who is trying to make any bet, but also trying to make a bet on a company who might be flat to barely growing over. A year or two or a few years. In any situation when an investor wants to invest, whether the slope of growth is like this, or at a much steeper angle. The investor has to believe. They've caught an inflection point.

They have to believe they've caught something that will extend into the future that they can extrapolate beyond just what valuation that they're investing in. [00:02:00] Right. So it is all about belief in the future and the story that you tell.

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For this one, founder. You can convince an investor to invest in you after a bunch of time that has been flat more, a minimal growth. But you have to be able to tell a story that things are about to change. And you have to be able to explain why those years had happened at that growth rate that it happened at and why it's going to be different from here on out. And the answer can't be, well, I just didn't have money.

And now if someone would just give me money, it would change. That's not enough, right. If money were really the only thing. It seems like at least an amount of time would actually have gotten you there. But if you can't even show that. Then how can you actually tell that story? So. [00:04:00] What this means is whatever situation you're in. Remember what story you're about to tell somebody. And remember that you need to tell them that something has changed. Some different, some insights, some. Addition to the equation. Is creating an upwards inflection, and this is the time that investors will be able to get on board. And by the way, If that's not true and you can't show that sort of change. Then you also have to be honest with yourself, whether or not you are ready to get investment. Are you actually. The company and opportunity that will drive the opportunity that investors are looking for.

Right. So you have to put on your honest hat step into their shoes. And if they're looking at a company that looks like that, Can you honestly say that there is something new that you have in your company that you, their money and their dollars will change. The way your company performs the way the future of your company [00:05:00] looks. Okay.

I hope that jumping into that very simple question that I think a lot of people have. We'll help you understand one, if you're in that situation, how you need to be able to answer that in two. If you feel like it can't answer that question. The reality of the situation, which is you need to get back into the lab, work on the company and try to figure out what it is that will change the future narrative. All right. Thanks so much for your time here.

I hope this was helpful. . And I'll see you on another episode. Of the back channel.

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