Introducing a very important book for entrepreneurs and those who want to raise investment capital for their business. The book is titled "The Six Secrets of Raising Capital". It was written by Mr. Bill Fisher, a successful entrepreneur, author, and has had successful operations with 21 different companies.
This book was written to be a guide for entrepreneurs who want to find investment capital, presented in a short, easy-to-understand, and practical format.
Regarding raising investment capital, most people can talk about it well. But in reality, getting an investor excited enough to believe in you and pull cash out of their pocket to invest in your project is no easy task.
Many entrepreneurs take their 20-plus page business plans to countless coffee shop meetings with investors, telling them, "I have a great idea. In the future, it can generate a billion dollars." Wake up. They have many great ideas like this. What makes you think you can get money from an investor with just a few words?
Many of those who fail in their entrepreneurial journey do so because they don't have enough capital to continue. Even some large, world-class companies have been forced to sell themselves because they couldn't receive investment.
For example, the company Hotmail, which you all probably know. This company used every method to raise investment capital, but in the end, they failed and had to sell themselves to Microsoft for $450 million.
Even a company like this couldn't receive investment, so what about your business plan, where sometimes all you have is an idea and nothing else? This book will take you by the hand and show you how to successfully raise capital and many other tips you've never encountered before. And no one else will tell you about these techniques.
Sometimes, a huge invention doesn't easily get investment. You might think all big companies today have highly creative and innovative ideas, right? The answer is not necessarily. Having a highly creative idea is good, but what's important is whether it's viable. And having just one creative idea isn't enough. What's important is that you know how to present your creative idea so that others can understand it.
This book will tell you how to tell a story to an investor. What important factors does a good story need? What elements do you need to tell a good story to an investor? Knowing how to tell a story is crucial. Everyone wants to listen to a story. Students want to listen to a teacher who can tell stories. Employees want to listen to a boss who can tell stories. Similarly, investors also need an entrepreneur who can tell a story.
Imagine if you create a business plan in a PPT with dozens of slides, filled only with numbers and confusing text, and spend hours explaining your business and project to an investor, only for them to end with the words, "Let me think about it." The author of this book is an expert in raising investment capital and has led more than 20 of his companies to success. It can be said that he has extensive experience in this field.
This book teaches you how to tell the story of your business plan so that investors will listen. Only when they understand what you are saying will you have a chance to present your brilliant business plan. If you don't know this technique, after just two or three minutes, the investor will likely have stopped listening. This causes you to lose a golden opportunity, a chance for capital, so to speak.
But not everyone can tell a story like a master storyteller. The good news is, storytelling has its own formula. Once you've learned this formula, it's not too late to go find an investor. The formula has three parts: make your story interesting, believable, and easy to understand.
So how do you write a story that is interesting? It's like watching a Hollywood movie. When you watch a movie, just from the beginning, you can probably guess who the good guy is, who the bad guy is, and how the story might end. Typically, in a movie, there is always a crisis and a problem. Then, a good character emerges with a solution, bringing about peace, and in the end, everyone is happy. A story like this can be applied to all sectors. For example, in the insurance industry, the problem is disaster. The solution is the protection service from the insurance company.
A story is good or not doesn't depend on whether that story makes people excited. But it depends on whether that story can solve a problem for the public or a group of people. Similarly, does the product or service you produce solve a problem in the market well? And the problem you solve is called a 'pain point'.
So, what are the problems in the market? For example, lack of education, disease, it could be a waste of time, or it could be difficulties, and so on. Can your business be the solution that comes in to solve those problems? If it can't, then you probably won't be able to get investment. In summary, find a real problem and create a solution, which is your product or service, to simplify the lives of a group of people or to make their lives better.
The people who are waiting for your product or service to come and save them are called the target customers. The formula is there. Let's try to apply it a bit to see that in successful businesses around the world, who is the problem, who is the solution, and how does the story end?
For example, in the company Google, people need information and knowledge, and they know that someone in this world knows about this information. But they don't know where to find it. The problem is right here: the lack of information. Google's solution is to create a platform where everyone can search for all kinds of information via the internet in just a few seconds. The results you search for, millions of pages, are provided to you instantly. This has made Google one of the most profitable companies in the world.
If you can't find it, you won't be able to get investment. If you do, it will only be from small-time investors who are your friends and family.
We see many successful examples, such as online food ordering apps, where the problem is the worry of millions of people. And their solution is to create an application that allows them to order any food they need, and it gets delivered to their house. Your solution must be easier, faster, or cheaper than what currently exists in the market. If you can't find these special points, before you even finish listening to your plan, the investor will probably have already made a decision.
Just knowing how to tell a good story isn't enough. You have to know how to make that story viable, to make the investor believe it. This is an important technique that every entrepreneur must know.
You who have many good ideas like this, sometimes it's just a good idea. But in reality, it's not viable. You need to connect your story to real life in society, to prove to the investor that it is not a fantasy, but it is a reality and can be done. I'll give an example of a story that is well-told and also believable.
Right now, it's about 9 PM. You've just left work. You're tired all day, and you're traveling home by yourself. When you get home, there's no one there, no food to eat, and no one to cook. You want to call your friends to have dinner together, but they are all busy. At this moment, you just want to eat at home and watch TV by yourself. Listening to this point, the investor is imagining the story you are creating. He is lost in the story you are telling. At this point, you must present your solution, which is ordering food online.
It's not just that. You have to show the investor the strengths and weaknesses of your app. How is ordering food online different from cooking at home? What kind of marketing strategy do you use to get people to download and use your app? Are there any strengths, and what technology do you have that is different from others? Do you have an experienced team with a lot of experience to do this work? Is your delivery faster than what's already available in the market?
Let's go back to the story from earlier. When you're tired and also hungry, you take out your phone to order food online. A few minutes later, someone knocks on your door and delivers delicious food to your house. Even though there's no one to cook, you still have a delicious meal to eat. At that moment, the investor is imagining themselves in the role of this story. He feels relieved for you, and in the end, you have food to eat.
A story like this, which lets the listener play the role, is a good story. By this point, the investor has probably made a decision to invest in your project. Because it is a real situation, and your solution can truly help simplify things for real users.
Apart from seeing the problem and being able to create a good solution, what you need to think about next is observing the market and forecasting for the future.
You are smart, but the investor is smarter than you. You have to know how to estimate the opportunities in the market, and how much market share you can capture, how long it will take, how much money you will spend, and how much profit you can make. All of these are things you need to think about. And those data points must be realistic and usable.
When it comes to investors, you only raise the good points. What about the bad points? What about the risks? If you fail, what's the plan? You don't need to wait for them to ask. You have to think about the risks ahead of time.
Most entrepreneurs don't want to bring up the risks to tell the investor because they're afraid the investor won't invest with them. But on the contrary, it's not like what you think. Investors want to hear about the risks and how you manage them. Because they know that doing anything has risks. It's not possible to be 100% successful. Everyone knows this reasoning, so there's no need to hide it. Perhaps a talented investor can even help reduce those risks for you.
Therefore, you need to speak clearly about the risks and your risk management strategy to the investor. For example, the risk of your business, which is a weakness, is that you don't have enough experience in selling the product or service. But you have a team that has many years of experience in sales and has existing customers in hand. Listening to this point, you may have shown your weakness, but within that, you also show your strength. And you will receive trust from the investor as well.
Because you are an honest person. In business, honesty is crucial. If you find an honest partner, you share the losses together. But if you meet a dishonest partner, even if you make a profit, you won't be able to divide the money correctly.
Besides making your story interesting and believable, the final point is to make it easy to understand.
How do you speak to make it easy to understand? What kind of language should you use to make your story short, concise, and understandable? Let's look at some examples below.
First, speaking of a man who is the father of the author of this book, he is a famous public speaker. He said that if you give me five minutes to speak on stage, I need one month to prepare myself. If you give me 20 minutes to speak on stage, I need two weeks to prepare in advance. But if you give me one hour, I can speak right now.
Another example, you all probably know the app TikTok, where in this application, each video has a very short duration of only a few seconds. From 15 seconds to at most 60 seconds. And this application, which is becoming more popular and watched than even YouTube, can show that most people do not like to spend a long time watching or listening to one thing. You are all busy. Therefore, whatever you do, it must be short and not waste other people's time.
Short things can be easy to remember and have important substance. When you have the shortest amount of time to talk to an investor, how much time do you need to explain your business plan? 10 minutes? Or 15 minutes? Sorry. The investor doesn't have that much time. If you can't spend 60 seconds to clearly explain your business plan to the investor, you will probably lose your opportunity.
Sometimes, a good investor isn't met in a coffee shop. Sometimes you meet in an elevator or at various business gatherings, so to speak. You have very little time. Therefore, you must learn your business model by heart and speak it in a way that is easy to understand. The shorter, the better.
Not just investors, I believe that you and I are the same. When you listen to someone talk about something, if in the first three minutes they don't say something interesting, you will probably start to zone out and stop listening.
You have to know that investors are very busy. They don't have time to listen to useless stories. They especially don't want to listen to stories that are not related to them or stories that lack appeal. You only have 120 seconds. How do you use that short time to concisely talk about your plan and business model? If you don't do it well, the investor will not be interested. You will be talking until you're blue in the face, but the investor will be thinking about where to have dinner tonight, or who to play golf with this weekend. If your idea is good, but you fail because you don't know how to speak, it is truly a shame.
Let's summarize the methodology for creating a business presentation for an investor, which we call a good story. Crafting a good story, we've already discussed. Next, you need 5 more tools to attract investors and achieve success. But if you don't have these 5 tools, you won't be able to get money out of the investor's pocket.
Those 5 tools include: First, a summary of your business plan.
Second, a one-page A4 document.
Third is the PPT presentation itself.
Fourth, a three-year forecast.
And fifth, supporting documents.
With a good story, are these tools still necessary? You need to know that these tools are extremely important. Imagine that when you prepare a PPT of a few slides that is very interesting, combined with your professional presentation, everyone is open-mouthed, sitting and listening to you. It's truly amazing. But if you don't leave behind an A4 sheet of paper that summarizes the story you told them, they will probably just be impressed and praise you for a moment. But it will fade away when you walk out of this room.
Therefore, this one-page document is truly important, serving as a crucial memento to make them remember you and as a guide to help them understand your business in the shortest time possible. And another thing, don't forget to leave your contact number written on that one-page document. Some entrepreneurs are careless, causing them to lose the opportunity for a second meeting.
Or when the investor starts to get interested later, or his friends or partners get interested, but then they don't know how to contact you. To avoid wasting time and losing this rare opportunity, you must be fully prepared with everything, especially the five tools mentioned above.
Tool 1: A summary of the business plan. This requires you to speak clearly about your business plan in the shortest possible time. These opportunities don't just happen in places that are pre-arranged. Sometimes it happens by chance in any location that you wouldn't expect. Whether it's the middle of the night when you wake from sleep, you must have memorized the words you need to say. Whether in a taxi, at a coffee shop, or in an elevator, you can meet an investor.
The more you meet people, the more you tell the same story, the better you will get at it without even realizing it.
Tool 2: A one-page A4 document that summarizes your business. Not too long, not too short, just enough to briefly summarize your business plan. You can give it to the investor or anyone interested in your project. It's not a secret. Don't be afraid that they will copy your business idea. Because if you only have an idea, it's not enough. Moreover, if your idea is that easy to be copied, you probably don't have the qualifications to do it anyway. A talented entrepreneur can do things that others cannot easily do.
The one-page A4 document must be arranged in a sequence that matches your business presentation and must have complete information about your business plan. You can write about the strengths, weaknesses, team, market strategy, or other information that can add points to your plan. But remember, write it all on just one A4 page.
Tool 3 is the preparation of a PPT that is engaging.
In the slide presentation, you shouldn't have too many pictures or too many numbers and figures. What you need to do is extract it from your story. When you are telling the same story over and over and making a presentation, you must remember a few principles below.
First, talk through each and every slide. You must be sure that the listener has understood everything about the content in the PPT. The longer, the better.
Second, when the investor asks a question that you don't know, don't pretend to know everything. You must tell the investor directly that "I don't know, but I will provide this information to you later."
Third, don't judge by the investor's actions. When you are presenting, some investors act as if they are not interested, as if they are not paying much attention, but in the end, they might become your investor. While some other investors ask many questions, but in the end, they just say, "I'll think about it." The phrase "I'll think about it" is just a polite way of saying no. Don't get your hopes up.
Fourth, remember not to distribute the business plan document, which we call the 'business plan,' to the investor beforehand. If you give it to them first, they will only read what they want to know, and you will lose their attention and the opportunity to make a great presentation.
Tool 4 is the three-year forecast.
You need to be prepared. The investor can ask any kind of question. Sometimes the questions are easy, but difficult to answer. For example, who is your target customer? On what basis can they take money out of their pocket to buy your product or service? How is your product price different from your competitors? What strategy do you have to capture market share?
You need to analyze and see what my company will look like in three years. How much revenue will there be? Where will the revenue come from? Because investors only think about the return on investment. They just want to know how long it will take to get the money they put in back, and how much profit they can make.
After that, you need to forecast long-term revenue and let the investor state the price he wants and the percentage he wants to take. You probably have already thought about this point, but what you think is not what the investor thinks. They want to spend the least amount of money to get the most shares possible. There will surely be a negotiation. Therefore, you need to think ahead about how many percent of the shares you will give up and for how much money, in order to operate on your company.
Tool 5 is supporting documents.
You must prepare some supporting documents that can back up your creative idea. And it must be a document that is trustworthy, such as news that has a professional basis or a website that has a clear source, like Wikipedia, for example. But not a news website that is written by a writer who has no source and no clear data.
The five tools above are the decorations that cannot be missing from your sexy business plan and can make the investor interested, leading to a successful collaboration.
Let's summarize the key points in this book. First, we talked about the secrets of storytelling. A good story has three important elements. That is, how to make our story interesting, make our story believable, and make our story short but concise.
To tell a good story, you need five more tools. First is the summary of the business plan. Second is the one-page A4 document. Third is the PPT presentation. Fourth is the forecast for the next three years. And fifth is the supporting documents.
Of course, getting an investor to pour money out of their pocket to put into business with you is not easy. Failure is normal. But every entrepreneur must have a strong spirit and always be focused on their goal.
Money that shouldn't be taken, don't take it at all. And you have to ask yourself first whether we really need that money or not. And as long as the money has not been transferred into the company's account, it is not yet called a successful capital raising. Because anything can change. Sometimes, after signing the agreement, the investor changes their mind, and that can happen too. I wish you all success in your entrepreneurial journey.