It's an Ask, Not a Rube Goldberg Machine
Just make them an offer they can't refuse.
Once Upon a Pitch Problem #4
You stare blankly at the last and final slide of your pitch deck, The Ask slide. You are in a logic death spiral, with levers turning knobs that roll marbles down ramps to start spinning wheels that end up pulling the first lever all over again. How do you tell the investor what they will receive for their investment when you don’t know how much the total investment will be? How do you know what milestone will be hit if you don’t know how many employees you can hire because you don’t know how much money you can raise? You estimate that you can release your minimum viable product (MVP) in 12 months if you raise $3 million, but if you only raise $2 million, then you can get to MVP in 19 months. If you get the non-dilutive funding grant you applied for last month, then that is free money to add to the story but you won’t know for 5 months if you won that grant. You end up convincing yourself that articulating your ask of what you need from the audience is too complicated because of all of these variables and on your finale slide, you type anemic bullets like “raising our seed round,” and “MVP in 12-24 months, depending on funding,” concluding your otherwise well-crafted pitch with a whimper.
Solutions
Do the numbers. You are in the serious business of asking other people to deploy capital to you or to quit their jobs and work with you. How can you do either if you do not know the fundamentals of your enterprise? You can’t. To ask for what you need today, you need to know when and how you are getting to day 1 of profitability, about 1,200 or so days from when you are making The Ask slide. Sketch out the enterprise financials all the way until you hit profit, 3-5-10 years from now, depending on the industry. Make sure you fundamentally understand everything that must be “true” in the world for your company to become a value creating enterprise: product costs, customer acquisition, dependency on regulations and vendors, salaries, overhead, taxes, travel, etc. If “math is not my thing,” or “I don’t do numbers,” is rattling around inside of you, you have a few choices: (1) change jobs because entrepreneurship is numbers, (2) learn how to do the numbers (well enough) through free EdX courses, or (3) pay someone to help you build out the financials. You don’t need publicly traded financials or even financials good enough to share; you need founder roadmap-directional financials to understand the next 3-5-10 years of funding so you can fill in The Ask slide today.
Simple wins. As an entrepreneur, you are always fundraising. You are going to pitch every day, many times a day, from now to the end of the enterprise’s life or to the end of your association with the enterprise. The Ask is always pitched: in the elevator, at the accelerator, to the angel network, to customers and potential employees, to the loan officer for a line of credit, at the VC firms, to the bankers for an IPO, to the partner at a merger. Each of those complicated communications tasks can easily be simplified by starting with first principles. In the pitch problem above, what is the indisputable truth of what you need to get to the next step? You need an MVP to prove the idea and to be able to raise the next round of financing necessary to test that MVP with customers. How much money do you need to achieve that MVP on a worst case timeline? $2M to build the MVP in 19 months. Boom, you have The Ask. If you are raise the full $3M, you can pull forward the MVP timeline. If you end up with the grant, you can hit the MVP earlier or you can produce a better researched and built MVP in the 19 months. Either way, your investors know what they are getting for the investment, and you know what you need to achieve, by when, to get to your next fundraise.
“We need customer introductions.” At the Satellite Show 2020 Startup Space Competition, Daniel Turner from TRAXyl stormed the stage with an ask of introductions to customers and that was it. He bootstrapped his R&D from a grant to create installation vehicles that paint optical fiber along existing roads to provide connectivity to last mile customers in rural and remote areas and what he needed now was to test the MVP with real customers. Daniel made the Judges an offer they couldn’t refuse: a self-funded MVP that needed customers. The Judges accepted the offer and gave him the win. Clarity and simplicity always trump complexity and contingency, especially at the end of the pitch when the audience is searching for the moral of your story. Reframe your mindset and view The Ask as the easiest part of the story for you and the audience to remember and retell.
What They Said
After working with hundreds of founders on raising money . . . there’s one slide that almost every founder gets woefully wrong. The slide is often referred to as The Ask . . . A lot of founders will tell you that they are trying to raise enough money to survive for the next 18 months. That’s probably true, but that will be true regardless of how much money you raise. A better approach is to think about what you need to accomplish to raise your next round of funding, and then work backward from there. This is probably a combination of metrics and milestones. – Haje Jan Kamps, “Without a clear ask, your pitch deck is useless,” TechCrunch, July 3, 2022.
See You on the Track
Rafferty Jackson
Author The First Principles Pitch, startup storyteller, board member, advisor and investor. Once Upon a Pitch is a weekly newsletter looking at one business pitch problem and offering storytelling solutions to help solve that problem.