Monday, August 12, 2013

The World of the Investor (for Presenters)

Again, I feel a bit odd even going into this material, but perhaps it’ll just be repetition for some while being news for others…

The Investor (let us give him or her a capital “I” for a generic proper name) oscillates between Fear and Greed:

  • Fear that they will lose their money on your project.  Suspicion is the BFF of Fear.
  • Greed that they will miss out on opportunity to make a killing.  Manic Haste is the BFF of Greed.

And it doesn’t take much to flip an Investor from one to the other (there is no middle ground).  In fact one and the same statement in a presentation can do it:

“Google has shown that the user base for online documents is huge”

Investor: OMG, what if you could make $2.50 for each Google Docs user [Greed], but OMG why couldn’t Google just take over this market [Fear]?

You can’t win with a bipolar audience like this; the best you can do is inflame their imagination.

It’s safe to say that the Investor will be in a state of Fear going into the presentation unless you’re a returning demi-god entrepreneur or their best buddy has just invested in you (if their best buddy is merely recommending you, that excites Suspicious Fear: “if it’s so good, why didn’t X invest in it?”).

It would seem that Job 1 is to flip the Investor into Greed, but this would be a big mistake because any attempt to do so will simply excite more Suspicious Fear (“why is she telling me all this pie-in-the-sky stuff; what gotcha am I missing”).

No, Job 1 is to return the Investor to the neutral state (which, paradoxically, will probably tip them over into Greed in any case).

The presenter does this by carefully framing the opportunity so that the Investor can hold it all in mind at once:

“I’m Entrepreneur Jones.  I’m asking for $2 million to prototype a teleportation service that will inaugurate in the U.S. in four years.  I’m partnering with two rocket scientists from Berkeley Teleportation Labs, the team that teleported a couple of hamsters to Titan last year.”

Why does this work?  Because the facts soothe Investor’s fears.  If Investor doesn’t know who Presenter is or how much money Presenter wants or how good the team is, or (briefly!!) what problem they are aiming to solve, Investor’s imagination can run rampant.  In a state of Suspicious Fearfulness, this means a spate of Fears going in.  A bad way to start.

The facts at least inhibit the Fear rush, and may even tip the Investor over into Greed.

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