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Saturday, 9 July 2016

Raising Funds For The IP Owner

What IP Owners Tend To Do

IP owners think that their intellectual property is going to add great value to their company. They position their intellectual property as the "secret sauce" that will help their company succeed. Their trademarks are well recognised and their brands are successful. Their designs are unique and enduring. Their patents resolve industry needs and present a real barrier for competitors to follow suit. 

And so IP owners will focus on the IP as the "main dish" during a fundraising presentation. They might be asking for a loan. They might be trying to attract a venture capitalist to inject funds into the company. They might be seeking a government grant. Whatever it is, it involves money and they need it bad, to take their company to the next stage.

Like everything else, you need to work hard to raise funds. Once you've done that, you can boss people around.

And so they prepare their Powerpoint presentation. They have the run down on their product, their company, their team. They detail in thousands and thousands of words, whatever they have done. The Powerpoint becomes filled with words that look like fine print. The presentation has become a "slidument", a slide that is really a document.

They point to their IP, and give valuation estimates. Since the company is sitting on IP that is worth millions, the money that they are asking for in return for whatever they are offering, is reasonable.

And the people with the money tune out. Their eyes glaze over. In their minds, they are thinking, "This is boring." 

Not surprisingly, the IP owner doesn't get the money he asks for. He might get a lesser offer, if he is lucky. Sometimes he isn't that lucky. After the end of the presentation, the IP owner shakes his head and wonders how the money people could view his company as worth so little. He tells himself that it's time to bootstrap. 

The Truth About The IP Owners' Presentations

The truth is that the presentation was boring. It was also too wordy. And it did not address what the investors and bankers wanted to hear. The venture capitalist sitting in the panel was waiting for a minimal presentation and the "Wow factor". He was waiting for the "burning question" and the stories of the journey that led the business owner to that moment. He was waiting for a presentation. What he got instead was a data dump. 

Don't get me wrong. I've pitched before, and I know what it feels like. A bunch of hardnosed individuals who have a lot of money but not so much knowledge about your business, asking you lots of questions in front of a crowd. I've been there. I was asked about this and that. In the end, I was rejected.

I did not give up. I became curious about what they wanted. I spoke to some of those who had gone for a pitching competition. Maybe a friend or two who had gotten a grant for a pet project and had gotten the funds they were seeking. What helped them to succeed?

Be Single-Minded

Some of them spoke to me about their struggles. They told me about the solution that they had created or envisioned, which would become the basis of their startups. Another one, a middle-aged inventor, showed me how his single product, which was refined over the years, became his bread and butter. He had only one mission in life, and he did it well. With single-minded dedication, he could focus on all the flaws and shortcomings of his product, compared with the competition. With dedication and zeal, he addressed every shortcoming and objection, and won over his critics.

He told me, "Kevin, you have to learn to focus. I raised my family with this one product." He was right. When I visited his office, I saw how many iterations he had had. Earlier iterations were blocky, aesthetically old school. The later versions had SMS capability built in, and Internet-based control dashboards. (It's an electronic invention.) I followed him to a couple of meetings, and saw how he pitched his product to potential buyers. He had single-mindedness. He was dedicated, and it showed.

It's common sense, people with money want to back people who are dedicated to the product. People that are reliable. And people who won't stop working to better the company after they get the money.

You've Got To Speak Their Lingo

Sell them your story. You have to learn the skill of telling a story. You may be a great researcher and a great inventor, but if you cannot tell others why what you are doing is important, they will not be compelled to support you. They cannot see why your IP is so important. And the end result is that they will not come in with the money you need.

Tell it to them in terms that they understand. Tell them the problem that it solves, and why it is important. Tell it to them in as short as possible, as compressed as possible, yet as interesting as possible, with props and visual aids. Show them a video if you can, something that encapsulates what you are trying to do, and makes you seem human. It does not have to be perfect. It may be unpolished. But it is what it is, and it may win them over.

The 10/20/30 Slide Rules

You may have heard about the 10/20/30 rule for Powerpoint presentations. It was made famous by Guy Kawasaki, who used to work for Apple as its tech evangelist. In short, a presentation should have 10 slides, last no more than twenty minutes, and all fonts must be size 30 or more.

Here's an excerpt from Guy Kawasaki's blog on the 10/20/30 rule:
Ten slides. Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting—and venture capitalists are very normal. (The only difference between you and venture capitalist is that he is getting paid to gamble with someone else’s money). If you must use more than ten slides to explain your business, you probably don’t have a business. The ten topics that a venture capitalist cares about are:
1. Problem
2. Your solution
3. Business model
4. Underlying magic/technology
5. Marketing and sales
6. Competition
7. Team
8. Projections and milestones
9. Status and timeline
10. Summary and call to action
You can read Guy Kawasaki's full post over at his blog.

Rehearse, Again and Again

You should rehearse your presentation, again and again. One famous pastor rehearses his sermons for 6 hours, again and again. And then he gives his first sermon, and his second, and his third. They are all the same. Guess which sermon is the one he records for TV? It's the last one, because by the time he's done it in front of an audience twice, he's confident enough to know where to stop and where to pick it up. He's telling a story.
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