TBC: How to Handle the Heat of an Investor Pitch

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They all welcome to another episode of the back channel. In today's episode, I want to talk about the idea of handling the heat. Of an investor pitch. What do I mean by handling the heat of an investor pitch? Okay. So I talked to a lot of founders who were preparing to go. Pitch a bunch of investors and they've never done it before.

And so they're kind of a little scared. They're a little bit anxious about what's going to happen. They've heard about investors who ask really hard questions and grill you and make you feel uncomfortable as you're pitching. And they want to know how to get ready for this. So that's the topic that I want to cover today.

And I'll start by saying, investors are not trying to make you feel bad. [00:01:00] So let's get that out of the way. Maybe there is a weird outlier out there who has a power trip that will want to make you feel bad. But for the most part, investors are good people. They're not there to make founders feel bad. They understand that it's challenging to even get that far and they understand how much anxiety there must be when it comes to pitching.

And so anything that they do should not be perceived as they're trying to make me feel bad or they're out to get me. They're actually just trying to understand more about the business. They want to know if you know about the business, they want to try to uncover the important parts about the business.

So what might come off as being grilled or feeling antagonistic is really just intense curiosity. In fact, I would go a step further and say that because no investor is really trying to make anyone feel bad. If they are going deep into a topic and trying to drill you on something. It's more likely than not that they're actually interested. [00:02:00] So Take solace in the fact that they might actually be curious about something they might actually want to figure out whether or not this is a great deal for them. Okay. Next. When you think about whether or not you're going to be able to withstand the pressure of a conversation with an investor.

Just note that. If you are not a pretender. If you actually are working on a business that you're excited about, if you actually are going to raise capital for something that you've been spending tons of time on, well, then I guarantee you, you know, enough to stand up to. A certain amount of scrutiny within an investor pitch.

Right? If you've been talking to your co-founders every day about how do we make this better? Why is this not working? What do our customers actually want? If you've been talking to advisors to figure out what's the next phase of the business, how do you validate this? Next thing that you're trying to work on. Then you have done enough to be able to hold a really compelling [00:03:00] conversation with an investor. So if you're not one of those people, if you actually are a pretender. Then I don't have anything for you.

You're not ready to go pitch investors. You're just playing founder at this point. If you go, and you can't talk deeply about something that you really care about, shouldn't be there anyways.

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So what I mean by you already have the tools and you already have the knowledge, it takes two to talk to anyone about your company. What I mean to say is that. Not that you won't know every answer to every question.

There will certainly be questions that you don't have the answer to, but you will know directionally speaking, the area that somebody's asking you something about. So I often think about. At time when I was advising a founder. Who [00:05:00] knew his company really deeply, but didn't know specific terms. Um, it was an e-commerce company.

And I heard afterwards that this, this founder didn't do well. In a conversation with this partner because the partner said. Um, what is your net revenue retention rate? And the founder was Flomex. He didn't know what that was or what that meant. Now it wasn't that he didn't know his revenue numbers.

It wasn't that he didn't know his return rates. It wasn't that he didn't know. What products were doing well or, or what sort of his return on invested capital was he knew a ton about his business. He just didn't know what net revenue retention was. And so when I came back to him and I got the sort of debrief around how it went, I told him. Look in these situations, you have every right to ask.

What does that mean? Are you asking about X? Are you asking about why. And one of the [00:06:00] best things you can do is say, I'm not sure what you're asking, but if you're talking about. Our revenue, or if you're talking about what returns look like, let me tell you what I know. So in situations where you're fielding a really difficult question, If you actually know your business, if you're not one of those pretenders, I just talked about. And you should be able to talk about things that, you know, deeply in and around that space you can say, well, uh, I don't actually know that term.

I don't have that figure off the top of my head, but let me tell you what I do have, let me tell you what I can talk about because Most of the time and investors, not like this, this founder needs to know this specific figure off the top of their head.

Otherwise I won't invest. They actually are just trying to understand an area of the business and their question. Happens to use a term that they had at the top of their head. So as long as you can talk in and around it, you're going to be fine. And like I just said, Having questions. That you don't understand. [00:07:00] He's okay. Following up their questions with clarifying questions is also okay. You are the master of your business.

You're the most deeply knowledgeable person about what you're working on at the table. And this is just a conversation. It's not meant to be an interrogation. Okay. So. Just as a recap, look. You are. Going to be going out and talking about something that you spend a ton of time on already and that experience and that knowledge is going to carry the day. As long as that's true for you, that you are actually spending tons of time on this thing that you really care about. No, that the investors are there to learn more about your business.

They're not there to make you feel bad. And you're going to have a great time. All right. Hopefully, this is helpful. I know it can be stressful. But part of the process is going through these challenging conversations. Remember that each challenging conversation each no is just one step in the direction of finding the investor. That actually wants to invest in you. [00:08:00] Okay.

I hope this episode of the back channel was helpful for you and I'll see you next time.

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