Often companies wanting to grow, raise growth capital by offering investors part of their company through an equity acquisition or private equity offering. Since 77% of all the companies that are considered by Angel Investors for investment do NOT receive investment, it is more important than ever for companies to prepare, expose, and communicate effectively with investors.
Companies often arrange one on one investor meetings or participation in group settings which create unique opportunities for companies to "tell their story" to investors. The challenge entrepreneurs face is the time it takes to meet with the hundreds of investors who will need to market to in order to close the few on investing in their company. Often entrepreneurs must choose between building their business or raising money. That is why so many small emerging growth companies hire investor relations firms to manage the time consuming part of a capital raise, leaving the critical negotiations and discussions with them as the owner of the equity.
Companies are always seeking ways to improve the efficiency of the process. One of the ways companies are successfully getting their message across to a larger group of qualified investors in a "high tech, high touch" way is with video elevator pitches. Every entrepreneur knows they must have a good "elevator pitch". The "elevator pitch" is an industry term for the time it takes the entrepreneur to ride the elevator and tell their story to a prospective investor before he / she gets off the elevator. A video elevator pitch is a little longer than a ride in an elevator, but has a similar goal. How long will an investor sit listening to a video on a computer …. about 2 minutes ?! A video elevator pitch is an effective way to briefly target investors to the company, provide necessary information, and lead the investor towards the next step, which is making contact to get the necessary investor centric documents.
There are three things every company must do as part of the process of attracting investors: Prepare, Expose, and Communicate.
Preparing to meet with investors and begin you campaign to attract capital means a few things:
o You are seeking the right amount capital for your stage of business and valuation
o You have an investor ready business plan that clearly explains your value in the marketplace and how you will produce a return on investment for your investors
o You can effectively communicate your investment opportunity in a few minutes
o Appropriate documents to facilitate the investment (PPM, Subscription Agreements, etc.)
Exposing your company to the investor community is a numbers game and must include:
o A multi-faceted approach that includes group presentations, one on one, press releases and internet driven programs
o Exposure to hundreds of investors to find the few that will invest
o A system to manage the follow up and maintain records regarding investor status
Communicating with the target investor community through an investor relations program is important for many reasons:
o Similar to attracting a new customer, sometimes it takes 2 or 3 exposures to gain their business (investment)
o Investors may have an initial interest but want to see how the company progresses before they commit their investment
o During the months it takes to attract capital investors focus and liquidity changes, maintaining communication with them could move them from a no, not now to a yes
The video elevator pitch itself is usually a two minute video going over all of the important company business information that promotes the company as a solid option for those investors seeking private equity investments. The video should be edited to show only the most vital and important information that will attract an investor. The video should be imbedded in the web page and not require any download on the investor's computer. Video elevator pitch programs should come with a password to protect important documents such as the company's business plan and financials, and investor documents. Public, non-confidential information that provides a snapshot on the company should be included on the web page. A one page executive summary in PDF format should be provided as an optional download.
These powerful video messages are only as good as the audience they reach. The video elevator pitch should be used in conjunction with press releases, electronic marketing campaigns, and direct mail campaign to target accredited investors. Companies, who hire professional companies to promote their video elevator pitch and other vital information to strategic investors, increase their likelihood of stimulating investor's interest, while also saving valuable time that can be used to continue building the company's business.
by Karen Rands of the Launch Funding Network
www.LAUNCHfn.com