When fundraising, build the investment case not the business case

Over the last several years, I have spent a bit of time on the investor side of the table vs. the operator side. I have more recently been directly involved in the deal review process as part of the Cascade Angels Fund and spend a fair amount of time talking to entrepreneurs.

Not every presentation goes to the next step. Sharing that news is hard as I’ve been in that seat, felt the disappointment, and made the “they just don’t get it” argument often. Mark Solon now of Techstars wrote Saying No Sucks in 2010 when he was with Highway 12 Ventures and I have found it super helpful to inform my approach.

The more I have done this and tried to provide direct, honest, and actionable feedback, I have begun to emphasize the point of this post.

When presenting to investors, build the investment case not the business case.

What I mean is, you spend day in and day out pitching the business to customers, prospects, press…anyone who will listen in an effort to make progress, get attention, get revenue. That pitch is around the business and why doing business with you is the right thing.

You want them to buy from you.

The investment case, on the other hand, is similar in overall messaging but the specific points you need to communicate are a bit different. You are working to convince the audience that it is an “investable business.” One that can scale, has good economics, is defensible/sustainable and is differentiated in some way.

You want them to buy into you.

There is no magic formula here as investors and entrepreneurs differ but I think this is an important point to think about how to make the most of the investor audiences that you work so hard to secure.

The inspiration for this post, like many I write, is an email I sent providing some feedback. Here is what I shared:

It is sometimes tough to go from customer pitching to investor pitching (I learned this the hard way a while ago) where you are use to building the business case for a purchase with customers/prospects vs. the investment case for an investment from investors. Landscape is more important to investors than customers. The overall message is similar but the core messaging points differ a bit – you are not trying to address/answer the question of “is it a business/why should you buy this product/service” you are working to build the case that it is an “investable business/you should buy in”

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