It’s the moment of truth. You know, when you’ve wowed potential investors with your amazing pitch (that you’ve practiced and practiced of course), and you can see the spark in their eyes. They’re inspired, engaged, and several of them offer their business cards and express interest.
But then something…or, rather, nothing happens. And while you’re fantasizing about how you’re going to put their money to work for your company, none of them winds up investing. In a blink, all that potential funding is gone.
For many entrepreneurs, the close is the hardest and least thought-out part of fundraising. In my 15+ years of fundraising for both non-profits and for-profit companies, and raising more than $26 million, I’ve learned the hard way how important it is to be good at closing. And I’d like to share some tips with you to help you become a powerful closer:
Make “the ask” short, sweet, and STRONG
We’ve talked about making the ask before, but it bears repeating here while we’re discussing the close. Once you’ve made your pitch and you’re ready to seal the deal, your approach needs to be strong and direct—and right to the point. For example, “I’m raising $1.2 million for my company and I’ve already got $300,000 committed. I’d love to have you as part of this round.” No need to over-explain or give reasons why they should invest. Just lay out the opportunity in concise terms.
Project confidence and create a sense of urgency
Even though you may be feeling a sense of desperation inside, it’s important for you to project confidence. In my fundraising workshops we talk about reverse-engineering the deal, which basically means going into the meeting knowing whether the investor will want to invest because you’ve done your research.
Know what influences them
Before going in for the close, find out what influences each investor. Would knowing that an advisor or shareholder they respect is interested in your company get them off the fence? Dropping a name of someone they know who has just invested or signed on as an advisor, or mentioning a big win can be just what’s needed to get them hooked.
Speak to their emotions
Remember that people invest with their hearts and not their minds, so your pitch should be compelling enough to move them emotionally. Of course, make sure you know all your numbers and are able to hold your own when they ask you financial questions (don’t worry, you don’t have to be a financial mastermind, just know enough to hold the conversation and answer their inquiries).
The biggest thing is to get them to say yes to something (usually a follow up meeting) immediately after your pitch, when they’re excited and inspired. You don’t want their enthusiasm to have time to wane. And don’t forget—eye contact! Look them in the eye, speak to their hearts, show them how passionate you are, and make your ask.
Make it easy and convenient
I had a Masterclass student who got a $20K commitment from an angel investor, but she just couldn’t collect that check. And although she was making up all sorts of scenarios in her mind as to why the deal wasn’t panning out, the fact is it wasn’t that the potential investor had changed his mind, it was just a logistics issue. His money manager was on vacation, and he had a million other things going on. Closing the deal may mean that you have to be a little assertive. Contact the investors saying “I’m going to be in your neighborhood on Thursday at 3 p.m. I’d like to stop by to pick up the check”. Never be afraid to follow up, especially if you’ve got their commitment. Make it easy and convenient for them!
Closing the deal, just like pitching, doesn’t always come naturally. In fact, it really is a learned skill. But I know you can do it. Just look at Kyra Sedgwick’s character on the hit TV show The Closer—even though she’s soft spoken, she knows exactly how to get the information she needs from witnesses and perps and closes every time!