Hidden Advantages of the Investment Summary (Read-Me Pitch)
Learn how a well-crafted Investment Summary (Read-Me Pitch) can improve your odds of raising capital.
(8 min)
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This video is for you if you are considering raising capital for your business, including raising equity capital from an angel round, VC rounds, growth equity round to IPO, or raising a debt round, or even applying for a small business loan, or applying for a grant or other type of non-dilutive capital. Fundraising for any type of capital is difficult. The typical angel group evaluates 40 to 50 companies for each one they invest in. A venture capital firm will evaluate over 100 companies for each one they invest in. If you've ever tried to get a small business loan from the SBA, you know that's not easy either. However, there are things you can do to tilt the odds in your favor.
The first is understanding that you'll need at least three types of business pitches to be successful when raising any type of capital. At Pitch Creator, we focus on the three most important types of business pitches. One, a concise attention-grabbing pitch, usually called the elevator pitch. Two, a readme pitch, which is designed to be emailed to the potential investor. We call that the investment summary. And three, a listen to me pitch, which supports your verbal presentation to your investor audience, but doesn't distract them from focusing on you. Typically, this is called the slide deck. The second thing you can do is to tilt the odds in your favor is understand how to use each type of pitch to its maximum potential.
In this video, we'll focus on the second type of pitch. I'll cover some hidden advantages of the readme pitch, which is designed to be emailed to the potential investor. By the end of this video, you'll learn some distinct advantages of the readme pitch or the investment summary and how to use them to get investors interested to take the next step, learn more about your business, and to maximize your in-person time with investors. Next, let's get into the topic of this video. The biggest advantage of the investment summary or the readme pitch is speed for both you and the potential investor. It's fast for you to create an investment summary because you can focus on the talking points and not spend a lot of time on graphics for the investor.
The investment summary is formatted like a term sheet which investors are familiar with and that format's easy for them to scan and understand and to quickly find the different topics that are most important to them. Also, it's important to note that it's much faster for a potential investor to scan an investment summary and get the information they need than it would be for them to go through a slide deck, which has a lot of graphics and other things they need to sort through. Making it fast and easy for potential investors is important because venture capitalists spend on average 3 minutes and 44 seconds reviewing a business pitch according to TechCrunch.
The second hidden advantage of a well-designed investment summary or readme pitch is based on the concept of more meetings doesn't equal more money. There's a Harvard Business School white paper on this topic. And the main takeaway of it is focus on getting quality introductions to investors who are likely to be a fit. Great, that's helpful. The now how do you do that? Well, by using an investment summary, you're making it easy for one investor to make an intro to another investor who might be a fit. Next, let's look at two cases. The no case and the yes case.
In the no case, the investor reviews your investment summary and realizes that your business is not a good fit for their firm or investing style and decides not to move forward. This is common, especially when you consider the statistics I gave you a little bit earlier about how many companies an angel group or venture capital firm evaluates for each one they invest in. It's not a reflection on you or your business. It's just that investors have specific things they focus on. Specific stages of a company, specific sectors the company operates in, specific types of business models, and more. You just need to find the one that's the right fit for you. However, if the investor has your investment summary, they can use that to easily make a warm introduction to another investor who might be a better fit for you and your company.
This is extremely powerful. It's extremely powerful because a warm intro increases your odds of success for a couple of reasons. First, investors know their peers and what they like to invest in. And second, referrals from one investor to another receive greater attention and therefore have a higher likelihood of being funded. Investors get inundated with business pitches from all types of people in companies, most of which are really not a fit for them at all. However, if one investor sends an email to their investor peer and says, "Hey, I saw this investment opportunity. It looks super interesting. It's really not a fit for me and my firm, but I'm sending it to you because I think it's close to what you like to invest." Well, what's going to happen? That email has a very high likelihood of getting opened. If that email has an investment summary attached to it, then it makes it easy for that second investor to scan and understand and that increases the odds of that second investor getting interested.
Next, let's look at the yes case. In the yes case, the investor reviewed your investment summary or your readme pitch and they're interested in taking that next step with you, which hopefully is an in-person meeting. That's awesome. You're excited and I'm excited for you. In this case, the investment summary gives you another hidden advantage. The potential investor has read it in advance and they are already up to speed on the basic information about your business and the potential investment. Now, when you meet with them in person to deliver to your listen to me pitch using your slide deck, you're starting the discussion at a much higher level. You're focusing on advanced topics. You're also answering investors questions on those advanced topics and you're taking their level of understanding to a much higher ending level.
The opportunity cost of time for investors is very high. So, you want to take advantage of every minute that you have with them in person. By using a well-designed investment summary or readme pitch, you'll be able to take advantage of the in-person time you have with investors, which is a huge hidden advantage that most people don't realize. That's covers the main topics of the video. Next, I'll cover a couple of summary slides you can screenshot. Before that, I have a small request. If you got value from this video, please hit the like button and subscribe button. Also, if you know someone who'd benefit from this video, please forward it to them. Getting likes and subscribers helps us create more videos. It's that simple.
To summarize what we covered today in this video, the first advantage of the investment summary is speed. It's fast for you, the in the entrepreneur, to create an investment summary because you're focusing on talking points, what the investor really wants to hear, and you're not spending time on graphics. Then the advantage of speed for the investors is because the investment summary is formatted in a way that it's fast for them to scan. It's easy for them to find the information that's important to them. The second advantage of the investment summary is around the concept of more meetings doesn't equal more money. By using an investment summary, you're making it easy for one investor to make a warm intro to another investor who might be a fit.
Next, we covered two cases. In the no case, the investor isn't interested in investing in your business, but they can use your investment summary to make a warm intro. This is extremely powerful because warm intros increase your odds. Investors know their peers and what they like to invest in, and referrals from one investor to another receive greater attention. Therefore, they have a higher likelihood of being funded. Finally, in the yes case, the investor reviewed your investment summary, your readme pitch, and they're interested in taking that step and meeting with you in person. And since the investor has already read your investment summary and understands the basics, you can skip over all that and use the in-person time to start the discussion at a higher level, focused on advanced topics, and elevate the investor's understanding to a much higher ending level. To learn more, hit the subscribe button to get new videos as they come out. Thank you for your interest and for watching this entire video.
