The Home Run

Hitter's Guide to
Fundraising
Happy About Raising Capital
Without Pitching

By Dan Sapp

21265 Stevens Creek Blvd.

Suite 205
Cupertino, CA 95014
The Home Run Hitter's Guide to Fundraising:
Happy About Raising Capital Without Pitching
Copyright © 2007 by Happy About®
All rights reserved. No part of this book shall be reproduced, stored in
a retrieval system, or transmitted by any means electronic,
mechanical, photocopying, recording, or otherwise without written
permission from the publisher. No patent liability is assumed with
respect to the use of the information contained herein. Although every
precaution has been taken in the preparation of this book, the
publisher and author(s) assume no responsibility for errors or
omissions. Neither is any liability assumed for damages resulting from
the use of the information contained herein.

First Printing: July 2, 2007

Paperback ISBN: 1-60005-059-X
Place of Publication: Silicon Valley, California, USA
Library of Congress Number: 2007931798

eBook ISBN: 1-60005-060-3

Trademarks
All terms mentioned in this book that are known to be trademarks or
service marks have been appropriately capitalized. Happy About®
cannot attest to the accuracy of this information. Use of a term in this
book should not be regarded as affecting the validity of any trademark
or service mark.

Warning and Disclaimer

Every effort has been made to make this book as complete and as
accurate as possible, but no warranty of fitness is implied. The
information provided is on an “as is” basis. The authors and the
publisher shall have neither liability nor responsibility to any person or
entity with respect to any loss or damages arising from the information
contained in this book.
Praise for The Home Run Hitter's Guide to
Fundraising (from the back cover)
“I can tell you from personal experience that the process outlined in
'The Home Run Hitter’s Guide to Fundraising' will help any business
person get results in any important business communication whether
you are pitching venture capitalists or leading an important meeting.
The ideas are powerful and the process works.”
David Kennedy, Associate Dean for Development, Stanford
University Graduate School of Business

"'The Home Run Hitter’s Guide to Fundraising' and the Delta

Communication Model are incredibly useful tools for entrepreneurs
preparing to talk to investors. I know our portfolio companies have had
a real advantage using this process as they have prepared for VC
meetings. If you want your company to stand out in a sea of
PowerPoint, put the information in this book to work."
Jennifer McFarlane, CEO Astia (Business Accelerator), San
Francisco, CA

"We have used the ideas in this book to great success not only with
sales people but also for executive level communication and
international business partner communication. If getting results when
you talk is important to you as a leader, then this book can be an
incredibly useful resource."
Matt Davenport, VP Sales, Skyy Spirits, San Francisco, CA
Publisher
• Mitchell Levy, http://www.happyabout.info/

Executive Editor
• Elisabetta Ghisini

Cover Designer
• Cate Calson, http://www.calsongraphics.com/

Graphics by
• Panastream Multimedia, http://www.panastream.com
Dedication
This book is dedicated to the fearless entrepreneurs of the world who
constantly inspire us with their imagination, dedication, and stamina.
Without you, we would still be sending smoke signals and painting on
cave walls. This book is also dedicated to the next generation of
entrepreneurs who have both the power and the responsibility to heal
a struggling planet, and make peace and progress sustainable and
profitable.
Acknowledgements
I want to thank the people who helped make this book a much better
reality than it could ever have been without them.
First, thanks to the O'Bryan boys at PanaStream. You are more than
a production team, you are creative machines. With Yvonne's help,
you not only helped me and my voice - you made it deeper, more
resonant, and smarter than the original.
To Mitchell and Elisabetta at "Happy About", thanks for taking a
chance and putting this in front of a larger audience. I look forward to
the journey.
To my sister Carver, you brought more than a professional
proofreader's eye to the project. The creativity, insights and courage
it took to make incredibly useful suggestions to a sometimes crusty
younger brother have made this a much cleaner and more useful
product.
I especially want to thank my clients, from academia to investment
services and from technology to the spirits industry, for giving me the
faith to stick with the contrarian stand and trust my instincts. I deeply
appreciate the help of the folks from venture capital and beyond who
corrected some of my misconceptions about the industry and who
shall forever remain nameless in order to protect their innocence.
I want to thank my dear friend, way-shower, fellow seeker and partner
in crime, Charles. Whether reminding me to relax, grind, or "suck it
up," you were always there and the path seemed straighter for the
company.
Finally, to my wife Anne, I can never thank you enough for your
patience, love, and support. My late nights, early mornings and even
grumpier disposition than normal must have had you looking forward
to the end of this thing at least as much as I have.
Thank you all,
Dan Sapp
A Message From Happy About®
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 C o n t e n t s

Foreword Foreword by Aaron Gershenberg, EVP for the

Venture Group at Silicon Valley Bank . . . . . . . . . . 1

Warm Up The New Old Game. . . . . . . . . . . . . . . . . . . . . . . . . . 3

How to use "The Home Run Hitter's Guide to
Fundraising" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chapter 1 Rules of the Game: The Communication

Delta Model . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Communication Delta Model . . . . . . . . . . . . . . . . 8

Chapter 2 Defining the Win: The Result . . . . . . . . . . . 11

The Starting Point: Defining the Result . . . . . . . . . . 12
Exercise: Defining the Result . . . . . . . . . . . . . . . . . . 15

Chapter 3 The Players: Know Your Investor, Know

Yourself . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Players Part I: Understanding Investors . . . . . . . . . . 18
Needs Analysis for the Investor: Professional . . . . . 19
Needs Analysis for the Investor: Personal . . . . . . . . 21
Exercise: VC Needs . . . . . . . . . . . . . . . . . . . . . . . . . 23
Players Part II: Know Yourself . . . . . . . . . . . . . . . . . 24
Your Needs: Professional. . . . . . . . . . . . . . . . . . . . . 26
Your Needs: Personal . . . . . . . . . . . . . . . . . . . . . . . 26
Needs Exercise: Entrepreneur . . . . . . . . . . . . . . . . . 29

Chapter 4 Game Plan: Part 1. What you Say . . . . . . . . 31

Your Core Message: The Hook . . . . . . . . . . . . . . . . 32
The Hook – Explicit or Implicit . . . . . . . . . . . . . . . . . 34
Excavating Content: Answering the Hook's
Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Hook Exercise: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Content and Your Hook: Looping back to the
Heart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Supporting Content Exercise:. . . . . . . . . . . . . . . . . . 41
The Prep: An Opening That Sows the Seeds. . . . . . 43
Prep Example: Describe the Problem . . . . . . . . . . . 44

The Home Run Hitter’s Guide to Fundraising ix

 Prep Don'ts: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Close. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
A Note on Summarizing . . . . . . . . . . . . . . . . . . . . . . 50
Exercise: The Close . . . . . . . . . . . . . . . . . . . . . . . . . 51
Key Content Areas: Attributes of a Great
Business, Not a Great Presentation. . . . . . . . . . . . . 51
The Elevator Pitch: 30 Seconds to Fame
and Glory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Elevator Pitch Exercise: . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 5 Game Plan: Part 2: What You Show . . . . . . 59

Lousy Reasons to Use Graphics . . . . . . . . . . . . . . . 61
PowerPoint Is Not a Crime. . . . . . . . . . . . . . . . . . . . 64
Using Graphic Supporting Tools Effectively. . . . . . . 66

Chapter 6 Managing the Game: Facilitating a

Successful Meeting . . . . . . . . . . . . . . . . . . . . 75
Facilitation Tips for the VC Meeting . . . . . . . . . . . . . 76
Managing Q&As . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
The Suspension of Disbelief . . . . . . . . . . . . . . . . . . 87

Chapter 7 The Swing: Delivery for Impact and

Influence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
A Strategic Framework. . . . . . . . . . . . . . . . . . . . . . . 90
The Power of Silence . . . . . . . . . . . . . . . . . . . . . . . . 99
Presence and Presentness: Connecting With
Others, Connecting With Yourself . . . . . . . . . . . . . 100

Chapter 8 Pre-Game Jitters: Managing Flight

or Flight . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

Chapter 9 Your Turn at Bat: Swing for the Fence . . . 107

Author About the Author . . . . . . . . . . . . . . . . . . . . . . . . . 109

Your Book Create Thought Leadership for your Company . . . 111

Why wait to write your book? . . . . . . . . . . . . . . . . . 112

Books Other Happy About Books . . . . . . . . . . . . . . . . . . . 113

x Contents
 F o r e w o r d

Foreword by Aaron
Gershenberg, EVP for the
Venture Group at Silicon
Valley Bank

As an executive, every time you talk you have an

opportunity to move your business forward.
Whether you're raising venture capital,
motivating the team or brainstorming for creative
solutions to pressing business challenges, the
leader who talks ”on purpose” (strategically and
with empathy) is the one who gets results
throughout the organization. I've known Dan
Sapp for ten years and have worked with him on
my own communication development as well as
seen the results of the work he has done with
executives here. ”The Home Run Hitter's Guide
to Fundraising” is a compelling, effective, highly
readable application of Dan's thinking process to
a unique communication situation that can spell
the early success or failure of a young company.
If all of my executives and clients used this
process, I'm convinced we would all spend a lot
less time narrating and translating valueless
PowerPoint slides and more time taking
advantage of market opportunities.

With the days of the ”Dot-Com” bubble beginning

to fade from memory and with more and more
venture capital back in the pipeline, smart MBA's
from Stanford, MIT, and Harvard have worked
their fingers to the bone developing companies
that are fundable. They've turned over every rock

The Home Run Hitter’s Guide to Fundraising 1

 they could to get meetings on Sand Hill Road and
other centers of venture capital. The problem is
that once they get those meetings many still want
to turn off the lights, read from text-heavy
PowerPoint slides, and put investors to sleep.

It is more than a waste of intellectual capability –

it is a crime against commerce. Every time it
happens, smart folks leave money on the table.
You don't want to leave money on the table. You
want money in your bank account. So, if you are
ready to stretch your empathy muscles, connect
and communicate strategically, this book is for
you.

I wish all of you the best of luck in your search for

the capital you need to grow your business. Put
”The Home Run Hitter's Guide to Fundraising” to
work and I am convinced that really working this
book can increase your success in these critical
meetings.

2 Foreword
 W a r m U p

The New Old Back in 1998 – when it was still called "The New
Game Economy" instead of "The Bubble" – it seemed
as though dot-coms couldn't open their wallets
fast enough to catch all the cash flowing out of
the venture capital (VC) pots of gold. The truth is
that it was never that easy. Right now, at a time
of renewed interest in creative business plans
and start-up ideas, investors are back to
assessing the viability of a young company
based on business fundamentals, and not on a
feeding frenzy of superheated IPO and M&A
activity.

"The Home Run Hitter's Guide to Fundraising" is

based on my experience helping some of the
most successful business people in America to
raise capital. I have coached and consulted with
leaders from organizations like Ernst and Young,
Mellon Capital, Microsoft, Nokia, the
development team and the Dean at the Graduate
School of Business at Stanford University. I have
also worked with the private equity firm Hellman
and Friedman JMI, as well the VC firms Mobius
Capital and 3i, one of the world's largest VC firms
with over 3,000 private companies in its portfolio.
These companies brought me in to help their
senior leaders prepare for critical communication
events and develop their ability to connect,
create influence, and move other people to
action.

During the years of the dot-com explosion, I

worked with hundreds of young companies
preparing for fundraising presentations and even
helped a few prepare for their IPO road shows.
Partly as a result of the success of those clients,

The Home Run Hitter’s Guide to Fundraising 3

 I have been able to develop relationships with
some of the very VCs and other investors you
hope to get to know now. The process outlined in
this book has helped entrepreneurs prepare for
both one-on-one meetings with VCs on Silicon
Valley's Sand Hill Road [the road with the largest
contingent of VCs in Silicon Valley] and for huge
VC and industry-specific forums around the
country and around the world. I have helped
startup and mature companies raise literally
hundreds of millions of dollars of capital and
close business deals worth millions more. All of
this experience means that this book brings you
the perspective of the people who can give your
business the green light. It is battle-tested and it
works.

How to use "The Home Run Hitter's Guide to Fundraising"

"The Home Run synthesizes strategic planning with the power of
Hitter's Guide human empathy to turn a potentially
to Fundraising" uncomfortable, unnatural presentation into an
opportunity to develop and deepen an important
business relationship. Because your under-
standing of your business and the needs of the
VCs will deepen as you go, I recommend that
you read through the entire process first and then
go back to the start and take each section one at
a time; completing the exercises that follow
before proceeding to the next step. Follow this
process and you will have a solid outline for a
conversation that can help you close the gap
between you and the people with the capital you
need.

While this program will help you select the ideas

you should share and teach you how to share
them, ultimately the greatest strength of this
book is to inform your thinking and behaving in
the course of these critical meetings. The more

4 Warm Up
 you look at yourself as a facilitator – someone
who moves a meeting towards a desired result –
the greater your chances of success. This
facilitation requires a kind of presence and
sophistication that few inexperienced leaders
have, so using the concepts in "The Home Run
Hitter's Guide to Fundraising" can be a real
differentiator for your leadership as well as your
business.

Be ready for change. If you follow your old habits

and the current industry standard, you are
doomed to look and sound just like every other
supplicant holding hat in hand. Stay the course.
Make a connection with the other people in your
meeting and sell what is good and right about
you and your company by putting the power of
"The Home Run Hitter's Guide to Fundraising" to
work.

The Home Run Hitter’s Guide to Fundraising 5

6 Warm Up
 C h a p t e r

1 Rules of the Game:

The Communication
Delta Model

The Communication Delta Model is the

foundation of "The Home Run Hitter's Guide to
Fundraising." It is a process for developing and
delivering ideas in a way that creates predictable
change in others.

Smart leaders recognize that their ability to

influence depends on their ability to move other
people to action. They do this through effective
communication, whether by example, in
conversation, via the written word or some other
way. The extent to which the actions of those
other people accurately reflect a leader's
purpose, is a measure of successful
communication and leadership.

Effective business communication creates

change. The Communication Delta Model is
based on the understanding that in order to get
what you want, the people you talk to must
change in some predictable way.

The Home Run Hitter’s Guide to Fundraising 7

 The Communication Delta
Model

The delta (D) symbol in math and science

represents the result, change or outcome of
some process. The delta symbol is also relevant
to our model because of its shape. Triangles are
a strong structure both theoretically and
practically. Structural engineers take advantage
of that strength when they design and build
bridges and skyscrapers. The Communication
Delta Model is based on the premise that each
side of this communication model depends on
and gains strength from the others. If one side is
weak, the communication will not be effective,
and you will not have created predictable change
in the listener. This will make it much harder, if
not impossible to get the capital you're looking
for.

This book is structured around the

Communication Delta Model. We start first with
the most important piece in the triangle, the heart

8 Chapter 1: Rules of the Game: The Communication Delta Model

 of the process – the Result you must have if your
meeting is going to be a success. It comes first
because it drives everything that follows.

The Needs side of the triangle consists of both

the needs of the VC and your needs as a
businessperson and communicator. Without a
clear understanding of both sets of needs, you
will not connect with the people you talk to. A
thorough needs assessment (in chapter 3) will
help you understand the power of empathy.
Without empathy, your needs will get in the way
of meeting the needs of those on the other side
of the table.

The Ideas side of the triangle consists of the

ideas you will select to share during your
meeting. Everything you say must be what that
potential investor needs to hear to be willing to
create the result you want. If you start planning
content before you know the result you want and
the needs of those you are talking to, you end up
simply dumping a bunch of data on them that is
probably only interesting and valuable for you.

Finally, you have to be able to deliver your ideas

in a way that adds value to your company, your
brand and the perception of your leadership. The
Delivery side of the triangle represents the
choices you must make in order to have impact,
create a compelling connection, and have the
influence you need in order to move that VC to
change in the way you need them to.

When your ideas are result-focused, driven by

the needs of the people you talk to, and delivered
with impact, you have a powerful tool for change.

The Home Run Hitter’s Guide to Fundraising 9

 The Dreaded A Data Dump is information transmitted
Data Dump without a clear result. We see it every time a
business executive stands up and talks for
an hour about the things that only have
importance to the executive. Communicating
solely from the perspective of the person
doing the talking will never be successful.
Without a radical sensitivity to the other
person, you are preaching to the converted –
to and for yourself.

Having seen hundreds of pitches to potential

investors, I can tell you that the Data Dump
is pandemic from leaders of young
companies looking for capital. Almost
universally these executives stand up (or sit
down) and talk about what they have
invented, developed, or conceived. They talk
about what their technology can do, how fast
it does it, and how small they can make it. If
they are lucky, the investors will listen
politely while they think to themselves, "So
what?" Investors are in business to make
money. Smart ones, even those with deep
technology backgrounds, don't care about
your technology in and of itself.
Sophisticated investors listen for
opportunities for return on investment (ROI).

10 Chapter 1: Rules of the Game: The Communication Delta Model

 C h a p t e r

2 Defining the Win:

The Result

You're not giving a speech, you’re not making a

presentation. You have a very short period of
time to move the people on the other side of the
table to some action that gets you closer to
getting capital. The Communication Delta Model
helps you identify the choices you must make in
order to move those potential investors to action.

The Home Run Hitter’s Guide to Fundraising 11

 The Starting Before you are ready to start talking or even
Point: Defining thinking about what you are going to say to a
the Result potential investor, you have to figure out why you
are talking.

Why are you having this meeting? We all

understand that ultimately you want money. We
also know that you won't get it in the first
meeting. Until you know exactly what you want
out of this particular interaction, you are not
ready to put pen to paper.

First, you need to define your desired Result.

You need to see the change in the person you
are talking to as a result of the conversation you
will have. From now on, as you think about any
business communication, start by asking "What
do I want that person to do?" instead of "What
should I say?"

The first question to ask yourself is – realistically

– what do you want the VC to do at the end of
your meeting. Specifically, how you want them to
respond, what this meeting will lead to, and how
the result of this meeting will move you closer to
getting your capital.

Assume you can only have one result and that

result must be in the form of an action on the part
of the VC. For instance:

– They will agree to meet with you again with a

partner
– They will introduce you to a channel partner
– They will contact your best customer or a
member of your advisory board

Any of these things can be the first step in the

development of this critical relationship.

12 Chapter 2: Defining the Win: The Result

 The result you select right now doesn't have to
be perfect. We will come back to it when you
have the additional insights you need to make
sure it is realistic and appropriate.

So, the Result is:

What you want from a specific communication as

defined by some change or action on part of the
other person.

A useful device for beginning to define the Result

for any strategic communication is to fill in the
blanks in the following statement:

When I finish this (phone call, meeting, letter,

voice mail, e-mail, etc.), the VC will (do,
believe, support, call, agree, sign, meet,
etc.).

This Result statement works because it contains

these key elements:

1. First, there is only one result. You build

success step-by-step in a relationship. If
you see someone you like at a bar, maybe
having a quiet drink is enough for the first
meeting. You can plan the wedding later.

2. Second, the action must be made by the

VC. Seeing the result as an action by the
other person forces you to look at the
process with a greater sensitivity to the
person who must act in order for you to
succeed. The result should be something
they will do, not something you will get. The
difference between "my client will buy" and
"I will sell" is critical. The first is

The Home Run Hitter’s Guide to Fundraising 13

 listener-focused and therefore drives
content that is listener-focused. Likewise,
the second is speaker-focused and ends up
generating speaker-focused content.

This concept is more than just semantics or

mental gymnastics. It is a critical part of
making your Communication Delta
structurally sound. Remember, you are
working to get someone else to do
something that allows you to move the
business forward. Right from the start, you
have to be radically focused on the other
person.

3. Finally, the Result statement asks you to

see an action or change on the part of the
VC. The ideas that drive an action or
change of being are very different from
those driving a state of knowing or
understanding. Many entrepreneurs I work
with come with presentations that have an
implicit result of "Understand my business
plan" – and the meetings tend to fall flat. If
what drives your meeting is educating the
VC, you have given yourself permission to
tell him everything you have time for – which
leads to the data dump.

It may be tougher than you think to limit

yourself to a single, achievable result, but it
is important to define this clearly. The result
you want, the action you want the other
person to take, must drive everything you
say and everything you do or you are
leaving money on the table.

14 Chapter 2: Defining the Win: The Result

 Exercise: Before reading further, identify a realistic
Defining the result for this meeting. Remember, you are in
Result the very early stages of this relationship.
Depending on the "vetting," or the quality of
the referral source or process by which an
entrepreneur gets access to a VC, you need
to set a conservative and obtainable result
for the first meeting. Can you expect a term
sheet? Not unless you are Bill Gates or Jim
Clark. If you are meeting with an associate,
maybe you want them to invite a partner to
meet with you either now or in a future
meeting. If you are meeting with a partner,
perhaps you want a meeting with the partner
who is most knowledgeable about the
industry in which your company operates.

In following meetings, you can begin to push

for greater intimacy and leverage. You might
work to get that partner to start some initial
due diligence by having an associate talk to
your customers. If your product is functional,
you can ask the VCs to test it themselves.

As you progress in the meetings with the VC,

the result must become more and more
involved and binding. Note that for every
meeting you must know exactly what you
want. This does not mean that you will get it
or that it won't change in the course of the
meeting, but it does mean that you plan,
think, and strategize with that specific result
in mind for that specific point in the
development of the relationship.

Now, make an initial commitment to a result

that will drive the content you will share in the
meeting:

The Home Run Hitter’s Guide to Fundraising 15

 When I finish this meeting, the VC will ___
(Result) ______ .

You fill in the blank: Agree to another

meeting? Bring in the partner who knows
your space best? Spend more time with you
than they had scheduled?

Don't worry about making it perfect right now;

we will come back to it.

A good result is one that is based on both the

needs of your business and the needs of
those with the money. Get it right, even if it
takes some work, and the entire process falls
into place. But don't worry too much about
getting it perfect; just focusing on any clear,
listener-focused result will create movement
and change in a positive direction.

16 Chapter 2: Defining the Win: The Result

 C h a p t e r

3 The Players: Know

Your Investor, Know
Yourself

Now that you've defined the result you want from

this meeting, you also need a starting point. The
starting point for a meeting with a VC is a clear
understanding of the basis on which they will or
will not make an investment. This is where
empathy comes into the equation. The more time
you spend walking around in their moccasins,
the more insight you will have into their decision
making, and the greater your chances will be of
getting them to move in the direction you want
them to move. Without empathy, we are back to
the Data Dump.

The Home Run Hitter’s Guide to Fundraising 17

 If we are not careful, our unconscious needs will
drive our actions and may drive the VC right out
the door. So let's take a look at the needs of the
two sets of people in this meeting. First, the
needs of the VC, then yours.

Players Part I: Understanding

Investors
One of the hardest things you have to
understand if you are looking for VC funding for
the first time, is the true nature of the relationship
you are seeking. Raising venture capital is the
first step in a long process of selling your
business. Understanding this concept at the
outset, is a powerful strategic focus.

VCs aren't looking for conventionally successful

companies. They are looking for companies that
will grow faster and create more value for
stakeholders (including themselves) faster than
the most elite early-stage businesses. Make no
mistake; once you take their capital, they will own
a significant piece of your business. Once a term
sheet is signed, you are an executive in a
corporation that reports to a board. You are no
longer self-employed.

But also remember that VCs are not your enemy

and they are not your competition. Companies
like yours are the lifeblood of the VC world –
without promising young companies to fund, VCs
would not exist. However, they have to be
extremely careful about the companies in which
they invest. VCs are under tremendous pressure
from their investors, other partners in their firm,
their current portfolio, and, of course,
hardworking entrepreneurs, like you, who are
beating down the doors to ask for money.
Failures are expensive, visible, and exhausting.

18 Chapter 3: The Players: Know Your Investor, Know Yourself

Needs Analysis In some ways the business of the VC is very
for the simple. VCs are in business for one reason: to
Investor: turn relatively small amounts of money into large
Professional amounts of money.

The first thing you need to understand is that

VCs won't invest in most companies even if they
are guaranteed to succeed. They aren't looking
for companies that are simply going to do well –
they are looking for companies that are going to
explode in value.

Unlike banks who demand a certain percentage

in return for money loaned, VCs look for
multiples. Multiples are a way of measuring the
ROI created in terms of a factor of the original
investment. This means that if a VC invests one
million dollars in your company in your first round
of funding, they want 5, 10, or 15 X (times) that
as their ROI. Why such a high multiple?

Because VCs are beholden to their investors.

That's right. The folks you are turning to for
money must periodically go out and ask for
money themselves. VCs turn to money
managers of all kinds – mutual fund managers,
retirement plans, municipalities, insurance
companies, and other (typically) large
institutional fiduciaries and ask them to invest in
a pool (e.g. fund). In other words, VCs are doing
the same thing you are about to do. They say,
"Let me keep some of your money for a while and
I will give you a lot more back." Once a money
manager invests in a Fund, he is a Limited
Partner (LP).

VCs have promised their investors a return that

is much, much greater than what they would get
from a mutual fund or other traditional investment
vehicle. They can only deliver this return if your
company delivers that big multiple on the initial

The Home Run Hitter’s Guide to Fundraising 19

 investment. That may sound daunting, but if you
are not confident that your company will be worth
five or more times an initial investment in three to
five years, you are looking to the wrong source of
capital.

Furthermore, even with all the due diligence,

board seats taken, introductions made and
capital invested, most of the companies a fund
invests in will either fail outright or barely reach
profitability. VCs kiss a lot of frogs before they
find their prince, and therefore they have to take
lots of meetings with lots of companies to find
one that might be worth betting on. Most won't
make it. Of the total pool of companies that a VC
looks at, only about 10% get a one-on-one
meeting, 2% merit the thorough evaluation
process called "deep due diligence," and only
about 0.5% (½ of 1%) receive funding.

That's a lot of frogs to kiss. But that is not the only

frog-kissing going on. Of the 100 companies that
actually get funding, traditional assumptions
suggest that one company out of ten will be a
home run. It's a tricky situation: VCs may hold
every single company in which they invest to the
high multiple criterion, but the law of the jungle
suggests that most will fail, some will do OK and
maybe one or two will pull the load for the entire
fund. This means the that 20% ROI distributed to
the fund's LPs is made up of the combined
performance of all the companies in that fund's
portfolio. VCs not only have to kiss a lot of frogs,
they will marry a few, and most won't turn into
princes no matter how much kissing they get!

The good news for you, the early-stage

entrepreneur, is that the VC needs a good place
to put their money almost as much as you need
the money.

20 Chapter 3: The Players: Know Your Investor, Know Yourself

 How does all of this information help you develop
your pitch?

Nowhere does it say that a VC is commissioned

to discover the next disruptive technology in
wireless communication, or the smallest digital
scanner, or the fastest most reliable wireless last
mile solution. It is arguable that if you could show
a VC how a new mouse trap manufacturing
business could drive a high multiple IPO in 14
months with very little risk, you would have a
good shot at getting the $40 million you need to
set up plants on four continents.

VCs invest in businesses poised to dominate a

big market. They do not invest in products and
functionality.

Needs Analysis Even if you know how VC firms make money, if

for the you are going to develop a relationship with
Investor: them, you need to know who they are how they
Personal work.

VCs often have some combination of

industry-specific leadership (many Sand Hill
Road VCs are ex-CFOs and ex-CEOs of
successful startups), investment banking with
fundamental business analysis experience, and
finance-oriented MBAs. The firms themselves
often have a preponderance of portfolio
companies from one industry or sector and the
individual partners and associates usually have a
core competence in one of those sectors. The
job requires analytical skills as well as an ability
to synthesize movements in markets and
shifts/trends in technologies. They need to have
the right mix of optimism and skepticism and

The Home Run Hitter’s Guide to Fundraising 21

 must become good judges of character. They are
competitive, smart, and do not suffer fools gladly.
Good VCs sniff out real value with the sensitivity
of bloodhounds. That said, they are still wrong
approximately 75% of the time.

A day in the life of a VC might begin with several

hours of reviewing a dozen of the executive
summaries that comprise the 36-inch deep piles
on their desk which they have received from
"trusted sources." They may spend several more
hours in back-to-back, mind-numbingly dull
PowerPoint presentations by startup companies
seeking capital, followed by hours of conference
calls or in-house board meetings with current
portfolio companies, topped off with a partners'
meeting to discuss new prospective investments.
If they are lucky, they may get to negotiate a term
sheet (funding agreement outlining, among other
things, the percentage of ownership the VC gets
in exchange for the capital they give) with the
attorney, CEO and CFO of a new portfolio
company. While most VCs don't admit it, most
don't spend time on unsolicited, "over the
transom" business plans. If these unsolicited,
non-vetted submissions are considered, it is
usually by lower-level associates who know it is
better to miss a good opportunity than it is to go
to bat for a lousy one.

All VCs had better love the game of business and

love the buzz of being a part of developing
companies that might have a major impact on the
business world. While many technology-focused
VCs do love the idea of funding "The New New
Thing," that love is always tempered by the
reality of "The Old Old Thing" – ROI.

In short, your typical VC is:

– Smart

22 Chapter 3: The Players: Know Your Investor, Know Yourself

 – Accomplished
– Professionally sophisticated
– Business savvy
– Short of time
– Has a short attention span
– Under tremendous performance pressure
– Responsible to LPs
– Risk-averse
– Looking for a needle in a haystack
– Highly accountable, visible, and responsible
for his decisions
– Has other people's money on the line
– Often has deep industry/technology
competence
– Must create ROI for LPs
– Must create ROI for LPs
– Must create ROI for LPs

The implications for how you will influence these

people are profound.

Exercise: VC Take your own snapshot of the VCs you want

Needs to meet with by answering the following
questions:

– What is the composition of their portfolio in

terms of industry and sector?
– What is your vetting source; how seriously is
the partner or associate taking you and this
meeting?
– What is the professional background of the
person with whom you will be meeting?
– How many meetings will this person have
attended by the time he sees you?
– What is the multiple this firm is using as a
benchmark for investment?
– What is the typical process from first meeting
to term sheet?
– How soon will the firm raise another fund?

The Home Run Hitter’s Guide to Fundraising 23

 Don't know the answers to these questions? Find
them. Go to their Web site. Call up executives
within their portfolios and ask them. Call partners
within the firm, or other firms with whom they
often syndicate deals (make joint investments).
The more time and effort you spend looking at
the world from the investor's viewpoint, the more
power you will have to select the ideas that are
most likely to have impact on them.

Players Part II: Know Yourself

Now that you have a clear picture of the key

drivers for the VC, you are almost ready to start
thinking about what you will say to them. But first
you have to do some of the hardest research of
all: you have to look honestly and objectively at
yourself and your business.

Why do so many business meetings feel like

Data Dumps? Because most of us communicate
wearing mirrored blinders. Not only are we
limited in our range of vision, but most of what we
see is a reflection of our own needs. Data Dumps
happen when an entrepreneur organizes
everything he knows about his business and
talks about it regardless of the value or interest
to the VC.

Presentations about a business, developed to

help others understand what you do and how you
do it, are doomed to be Data Dumps. Especially
when you let PowerPoint drive the planning, you
have the current – lousy – industry standard.
They all look alike. They all feel alike and they do
absolutely nothing to help you sell your business.

24 Chapter 3: The Players: Know Your Investor, Know Yourself

 If you want to have real influence over others,
you have to communicate with a radical
sensitivity to the people you are talking to. A
radical sensitivity to the other person means that
the listener's needs drive everything you do and
everything you say.

But the other person's needs as opposed to

what?

In this instance, it is The VCs' needs as opposed

to your needs - the needs of the entrepreneur
leading the meeting.

If you do not realize how your own subconscious

drivers influence your decisions, you risk letting
your needs drive your communication.
Remember, in your meeting, it won't matter what
you want or need. What matters is what drives
the choices the VC makes.

Some of your needs are conscious and clearly

understood by all parties – your desire to grow
the business and your need for capital. Some are
physiological, like the ones I will discuss at the
end of this book on managing the fight or flight
response. Some are unconscious, neurotic and
even self-destructive. But whatever they are, and
wherever they come from, if you are not aware of
them, you can't manage them. The better you
know yourself – in any context – the better able
you are to connect with, meet the needs of, and
ultimately influence other people. This is critically
important as you plan what to say and how to say
it in your meetings with VCs.

Let's do a needs analysis for you, the

entrepreneur. What follows are a range of
unspoken needs that, left unmanaged, can get in
the way of you meeting the needs of the people
you talk to.

The Home Run Hitter’s Guide to Fundraising 25

 Your Needs: Capital Hungry: You need to raise capital for
Professional your business. The challenge is to make sure
that your appetite for capital doesn't rob you of
your ability to meet the needs of the VC. The
entrepreneur/VC relationship is not an
adversarial one, but when you want something
that someone else has (capital), the tendency is
to project an adversarial element into it. When
competitive people get into adversarial
relationships they try to win. If your attitude
reflects your need to win this meeting instead of
your desire to convince your VC of the value of
your company as an investment, you run the risk
of appearing defensive, and maybe even hostile.

Pride: You and your engineers have worked

your rear ends off developing a tool that actually
does something powerful. You have every right
to be proud of what you have developed. You
also need to understand that the functional
power of your technology or product has very
little to do with the quality of the business as a
potential investment. Products and solutions
have relatively short lives. Great businesses can
live, prosper, and create value for a long time. I
can't tell you the number of times I have
personally heard VCs say, "We don't invest in
technology, we invest in businesses."

Your Needs: Professional needs are often conscious and

Personal therefore easier to manage than other types of
needs. Personal needs are often harder to
assess because they are sometimes completely
subconscious. But if you want to have real
impact on other people, you have to find a way to
see yourself the way they see you.

26 Chapter 3: The Players: Know Your Investor, Know Yourself

 Intellectual: I have coached and consulted with
many leaders of VC-backed companies who are
great problem solvers and quick thinkers. Along
with competence and a measure of success,
however, often comes an ego. Having a strong
sense of who you are and what you are capable
of is a great asset. However, if your need to
convince a VC how smart you are overshadows
your ability to give that investor what they need,
you may be the smartest person in America who
never gets funded.

Highly intelligent people often use vocabulary

that only has meaning for an extremely small
segment of the world's population. If you are
describing your market, your product or the
nature of your solution in language only relevant
to industry insiders, you risk creating an
understanding gap between you and the VC. The
latest industry and company buzzwords and
acronyms fall into this category.

I am convinced that if you can't explain

something to my grandmother who is turning 100
next year and still uses a rotary phone, then A:
you aren't ready to pitch it because B: you don't
really understand your value proposition that
well.

Snobbery, whether intellectual or social, is never

attractive. The person who can explain a
complex idea in simple terms appears to
understand it better than someone who leans on
the latest jargon.

Delta Law of Communication Responsibility:

The person doing the talking is responsible for
helping the person doing the listening to under-
stand, follow and take action. It is never the lis-
tener's job to make the talker's job easier.

The Home Run Hitter’s Guide to Fundraising 27

 Financial: The fact that you need money for a
new roof or a new car may be driving your
ambition, but if it drives your content or (as we
will see later) your delivery, you can appear like
you are pleading. You look like you’re powerless
and project yourself into a position of lower
status in the professional hierarchy. If everything
you say and everything you do doesn't look and
sound as if you have a right to be there, you will
be leaving money on the table.

Physical Security: If you let your discomfort

drive your content and delivery, you will most
likely seem needy, weak, and unsure. VCs, like
the rest of us, make an instantaneous
assessment of you as you walk into their office.
Part of obeying the Delta Law of Communication
Responsibility suggests that you must make the
choices that help you look and sound like the
leader you are (or can be).

Many conscious and subconscious needs can

influence your ability to develop and deepen a
relationship with a potential investor. Consider
the following as you work to bracket your needs
out of the planning process in order to select the
ideas that are radically results-oriented and
focused on the needs of your VC.

Needs to Explore:

• Need to win
• External competitive pressure creating urgency
• Comfort
• Control
• Power
• Need to please
• Wanting to be perceived as friendly
• Not wanting to seem pushy
• Not wanting to seem weak
• Fear of showing ignorance
• Need to be right

28 Chapter 3: The Players: Know Your Investor, Know Yourself

 • Need to perform
• Need to meet the needs of teammates
• Need to make a million dollars before you are
thirty
• Need to be the youngest, oldest, first woman,
man, etc. to do X
• Need to earn more than your classmates, your
father, etc.
• Need to seem older or younger

Our needs are neither good nor bad. They just

are. In some combination, they make us who we
are. Absent some mechanism for assessing our
own sometimes hidden needs, however, they
can become powerful obstacles for achieving
both professional and personal goals. As the old
Zen maxim goes, "the only real mastery is self
mastery." Look at yourself as objectively as you
can. Ask those closest to you for feedback on
specific issues and let them know that honesty is
the only way for you to get the results you are
after. Hire a therapist or a coach if you need to.
Know yourself better and you will be better able
to get results as a business communicator and
as a leader.

Needs Take 10 minutes to make a list of the issues

Exercise: that might be driving your choices as a
Entrepreneur communicator. Don't edit. Just write down
what is important to you right now for both
your business and personal life. Once you
have written them down, keep them with you
as you begin to outline the ideas you chose
to share with an investor. This will help you
judge whether you are focused on the VC or
on yourself as a communicator.

The Home Run Hitter’s Guide to Fundraising 29

30 Chapter 3: The Players: Know Your Investor, Know Yourself
 C h a p t e r

4 Game Plan: Part 1.

What you Say

Okay. You have defined the result you want in

terms of some change or action on the part of the
person you are meeting with. You have also built
the first side of the triangle because you know
what drives the VC and you have taken the time
to look objectively at yourself in order to make
sure his needs are driving the process, not yours.
But it's not enough to just know your audience or
know yourself. You have to use those insights to
make sure that everything you say and
everything you do is based on what the VCs
need to experience in order for them to go where

The Home Run Hitter’s Guide to Fundraising 31

 you want them to go. This is how empathy
becomes a strategic tool and helps you make a
critical connection. Connecting and creating
change is what business communication is all
about.

You have to start building the second side of the

triangle. You do this by thinking about your result
together with the VCs needs and select the ideas
they need to hear so that they are willing do what
you want them to do. These ideas – words,
images, analogies, and stories – are the second
side of the Communication Delta Model.

Your Core A good way to start thinking about ideas is to ask

Message: The yourself: "What must this VC believe if they are
Hook going to do what I want them to do?" Based on
the needs you know a VC has, what can you
promise to deliver that has real value for an
investor?

Your core message is a Hook that says to the

VC:

Do what I want you to do and I will give you what

I know you need.

You must know exactly what that particular VC

needs and you must have a solution that
specifically meets that need. Otherwise you are
swinging blind.

Your Hook should come near the beginning of

your talk; it might even function as your opening.
Before you get very far into your meeting, you
need to articulate your core value proposition
and why they should listen to you carefully. A
successful Hook moves your potential investor to
action by delivering the necessary information:

32 Chapter 4: Game Plan: Part 1. What you Say

 • WIFM, or "What's In It For Me": Tells the VC
what's in it for them to do your Result and gives
them a reason to listen by identifying your…
• Core Value Proposition: which tells the VC how
your solution will create ROI for their LPs while
making…
• A powerful request that tells them what they
have to do to get their WIFM and…
• Raises questions in their minds, the answers to
which become your supporting content.

Let's look at these one at a time.

WIFM: Your Hook must tell a potential investor

why they should do what you want them to do,
based on what you know is most important to
them. With the venture community, if the WIFM
does not clearly relate to ROI, you'd better have
a really good reason why not (for instance, they
only fund nonprofits focused on ecological
restoration).

Core Value Proposition: Your core value

proposition describes the problem your product
or service solves with a radical sensitivity to the
needs of an investor. It is not enough to say, "We
make wireless routers." If your Hook is going to
work, it has to suggest the opportunity for the
investor: "Our unique wireless routing solution
saves our customers $1,000 a month over our
competitor's solution."

Powerful Request: If this investor wants access

to the opportunity your solution provides, they
have to do what you want them to do. If, for
instance, your Result is for them to perform some
initial due diligence, you might say: "The more
you know about our company, the more
compelling this investment opportunity
becomes." It may not be subtle, but it tells them
you know what they need and what they need to
do to get it.

The Home Run Hitter’s Guide to Fundraising 33

 Raises Questions: During your meeting, you
will have to say more than just your Hook. When
you have 30 minutes instead of 30 seconds, you
not only have to suggest that your company is a
good investment, you need to prove it. The
content that supports your WIFM and your
Powerful Request falls explicitly from the words
you use in your Hook. Your supporting content,
the bulk of the ideas you select to share during
your meeting with a VC, are literally the answers
to the questions that a good Hook creates for the
people you are talking to.

The Hook – Depending on how the first few minutes of the

Explicit or meeting flow, it may not be necessary nor helpful
Implicit to recite the words exactly as they are written
out. That being said, You should find a way to
work the actual words of the Hook into the
conversation near the beginning because those
ideas must be planted firmly in the mind of the
investor. It is better to seem a bit rehearsed than
not get the core ideas of the Hook out there. If the
VC hears and understands your core value
proposition, your powerful promise, the WIFM for
the investor to do your Result and the right
questions in the organic course of conversation,
then go with it. But if you are not sure you have
really set your Hook, take the opportunity to say:

I want to make sure that you understand

that this company will lap the field in the
$40B wireless router space and we want
to take you with us. We will be a highly
profitable $100M business in 24 months.
But you will have to know more about us
than this half-hour meeting will allow.

34 Chapter 4: Game Plan: Part 1. What you Say

 Find ten different ways to get your message out
there conversationally. The more fluent you are
with the intersection between your Result and
the investor's WIFM, the more confident you will
be when questions start coming from left field.
Try not to think of this as a presentation. It would
be great if you never made another presentation.
Even with 1,000 people in your audience, the
more that what you say seems like an important
conversation, the more impact you will have.

The ultimate test of your Hook is this: If the VC

believes the promise of the WIFM, they will give
you your desired result. If you are convinced they
will, then all you have to do with content is
convince them you can deliver on that promise.
You do that by answering the questions your
Hook generates.

Excavating So how much is too much to say and how do you

Content: know what to share? You have lots to say about
Answering the your company and so little time. How do you
Hook's organize your thoughts in a way that helps you
Questions achieve your result?

You don't organize, you select. Organizing is a

prescription for the Data Dump. Your Hook has
already done the heavy lifting in the process of
distilling the ideas you must share in order to
convince an investor that you can deliver. If you
find yourself inventing questions that you want to
answer – “they might want to know about this, I
can't leave this out” – then you are probably back
to being driven by your own need to tell versus
the VCs need to hear.

Remember that the final benefit of a good Hook

is that it raises questions in the minds of the
people who hear it. Why is that such a big deal?

The Home Run Hitter’s Guide to Fundraising 35

 You don't want to leave a potential investor full of
questions, right? Actually, some unanswered
questions are critical to the development of the
relationship. Remember that saying everything
you know is a Data Dump. But the questions
arising directly from your Hook actually define
what you say in the rest of this meeting.

Let's return to the router company Hook as an

example.

When you really kick the tires on our

team and our technology, I am
convinced you will find that this company
will lap the competition in the $40B
wireless router space. We will be a
$100M company with 40% margins in 24
months.

The Result for the investor is to "really kick the

tires," or initiate some due diligence that is the
next step toward making an investment.

The WIFM for the VC is the ROI on an

early-stage company growing from virtually
nothing to one valued based on the market and
an estimate of how big you project the business
will be. This is one reason you want to give them
some idea of the scale early on – it gives them a
reason to listen. If the projections are
reasonable, based on their understanding of the
industry and sector, and large enough to get
them seeing dollar signs, then they are more
likely to give you their undivided attention.

First, identify where you want them to go:

When you really kick the tires… Identifies

the result – where you want the VC to go –
and raises the question:

36 Chapter 4: Game Plan: Part 1. What you Say

 – What do I have to do to "Kick the tires"?
Answer: Start some initial due diligence.

Then tell them why your company will succeed

based on their definition of success.

…on our team and technology…raises the

questions:
– What's so great about your team?
– What is your technology?

…this company will lap the competition…

– What are your competitive advantages and
barriers to entry in your product class?

…in the $40B wireless router space…

– Where did the $40b market come from?

…we will be a $100MM company with 40%

margins in 24 months…
– How will you drive $100mm in revenue with
40% margins in 24 months?

You now have five or six key questions that have

to be answered if you are going to move the VC
to action. What most people call the content of a
presentation is really nothing more than the
answers to the questions that flow directly from
your Hook. Developing content this way is critical
for making these meetings strategic and
results-focused. Your Hook tells the VC what he
has to do for the opportunity to look more closely
at a company that might create the returns they
are looking for. If you stick to answering the
questions that directly fall out of the Hook, then
your content will further convince the VC that you
can deliver on the promise the Hook implicitly
makes – that the VC will make money by
investing in your company.

The Home Run Hitter’s Guide to Fundraising 37

 This stage of the planning process requires extra
vigilance and discipline. At this point in the
process, entrepreneurs often feel a powerful pull
into the black hole of the Data Dump. Even with
faith in the process, the desire to talk about how
long it has taken you to write the code, the cool
functionality of your product, the thousands of
applications the product has, how progressive
the culture of your company is, etc. can be
overpowering. But all of that content is driven by
the needs of the wrong person in this
conversation. Anything that is not radically
listener-focused risks confusing the VC or
convincing them that you don't have your eye on
the prize. Remember, the prize for professional
investors is making lots of money.

A good Hook serves several critical strategic

roles in developing communication that moves
listeners to action.

First: A good Hook gives the listener a

reason to pay attention. It clearly identifies
WIFM from the receiver's point of view.

Second: A good Hook identifies, implicitly or

explicitly what the listener has to do (the
result) in order to get WIFM.

Third: A good Hook leaves certain questions

unanswered in the listener's mind. The
answers to those unanswered questions,
and only those answers, becomes the
content of the communication.

Hook: This new marketing program is the key to

making this quarter's earnings goal.

38 Chapter 4: Game Plan: Part 1. What you Say

 • Deliverer's Result: The listener will accept the
new marketing program.
• WIFM: Making the quarterly earnings goal.
• Unanswered Questions:
– What is the new marketing program?
– Why is it the key to making the quarterly
earnings goal?
– How will it help us make the goal?

A good Hook motivates the listener to act on the

desired Result. If he hears the Hook and says,
"So what?" then you have the wrong WIFM and
need to do more research.

If the listener buys in and is excited but doesn't

act on the result, then your Hook did not clearly
align with the WIFM for that listener.

Hook Exercise: Look at the following Hooks and identify:

– The deliverer's desired Result
– The listener's WIFM
– The questions that must be answered to
move the listeners to the Result

"This strategy is the key to increasing market

share."
Result: Listeners will __________________.
WIFM (for listener) ____________________
?__________________________________
? _________________________________
? _________________________________

The Home Run Hitter’s Guide to Fundraising 39

 "Accepting this order now means more
profits tomorrow."
Result: Listeners will __________________.
WIFM (for listener) ____________________
?__________________________________
? _________________________________
? _________________________________

"Let me come back on Thursday and I'll show

you how we can improve your ratings."
Result: Listeners will __________________.
WIFM (for listener) ____________________
?__________________________________
? _________________________________
? _________________________________

"A real coaching relationship is the key to

lower turnover."
Result: Listeners will __________________.
WIFM (for listener) ____________________
?__________________________________
? _________________________________
? _________________________________

Content and Your Hook is the heart of your content. As you

Your Hook: evaluate the quality of the ideas you choose to
Looping back share, ask yourself, "Must the people in this
to the Heart meeting hear this now in order to believe my
Hook?" If the answer is no, then that idea is
probably information near and dear only to you
and therefore part of a Data Dump. Use the
following questions as a reality check:

40 Chapter 4: Game Plan: Part 1. What you Say

 • Does the way you are talking about your product
create a perception of value from an investment
standpoint, or are you bragging about your
beloved pet project?
• Do the members of your team sound like business
school graduates or leaders of a company that will
dominate a huge market?
• Do your financial projections support the scale an
investor will need, or are you showing us that your
accountant is a star at Excel?

If you can't close the loop from your ideas to the

WIFM for your listeners, that content will
probably take you further and further away from
the result you want.

Supporting Answering the Questions

Content
Exercise: Write down your Hook. Using the words and
key ideas it encapsulates, identify the
questions that flow from it.

Tip: If your Hook is half a page long and 20

questions fall from it, you are dumping data.
Remember, you are only working to achieve
one thing – whatever you have identified as

The Home Run Hitter’s Guide to Fundraising 41

 your Result. The Hook should be just what
the VC needs to hear for them to want to do
that specific thing.

At this point, an outline should begin to take

shape. Hopefully it looks something like this:

Hook: When you really kick the tires on our

team and our technology, I am convinced
you will find that this company will lap the
competition in the $40B wireless router
space. We will be a $100M company with
40% margins in 24 months.

Questions from the Hook:

– Who is on your team?

Answer
Answer
Answer

– What is your technology?

Answer
Answer
Answer

– What are your competitive advantages and

barriers to entry in your product class?
Answer
Answer
Answer

– Where did the $40b market come from?

Answer
Answer
Answer

– How will you drive $100m in revenues with

40% margins (describe your revenue and
profit models) in 24 months?

42 Chapter 4: Game Plan: Part 1. What you Say

 Answer
Answer
Answer

Make sure you are developing these ideas with

the same sensitivity to the VCs interests and
needs that you used for your Hook. The fact that
your team has a combined experience of 100
years is nowhere near as important as the fact
that each brings leadership experience where he
or she developed a leading solution in a similar
space and led it, for instance, to a high-multiple
IPO.

As you start filling in your blanks, continue to ask

yourself, "What makes these ideas valuable to a
potential investor?" Let your content answer the
questions that flow from your Hook, focus the
answers on the needs of your potential investor,
and your content is now as strategic as the rest
of the process.

The Prep: An Entrepreneurs are often surprised that they don't

Opening That start the planning process with a snappy
Sows the opening. The truth is you should not plan your
Seeds opening until you have your Hook and your
supporting ideas developed. You want to make
sure that everything you say, including your
opening or what is called your Prep, is a part of
the strategic process of convincing VCs that you
can deliver on the promise you make in your
Hook. As the term implies, your Prep is there to
prepare the VC to hear your message, but you
want your Hook and your supporting ideas to
drive your Prep, not the other way around.

Remember, this is not a presentation. You are

having a business meeting with intelligent, busy
people who are under lots of pressure. It is very
unlikely that you will want to use a dramatic story

The Home Run Hitter’s Guide to Fundraising 43

 or confetti-filled balloons, and please, don't start
with a video clip or Web-based demonstration. At
least not until they ask you for it.

The most effective way to open these meetings

is to create a context for the solution by simply
describing the size, the immediacy and the cost
associated with the problem you are planning to
solve. The bigger the problem and the pain
associated with it, the better.

Prep Example: Right now, millions of network users are

Describe the tied to their desks and their desktops if
Problem they want the immediacy of information
exchange and the security the networks
provide for them. Your partners have to
carry password generators that silently
become obsolete or you have to
remember dozens of keystrokes to get
on protected networks. When you can't
get to the office, even if you have
computers on the road or in the home,
most likely you have to throw away full
days of productivity. It costs the financial
services industry alone over 4 billion
dollars a year. The total problem in the
US is at least 10 times that number and
larger still around the world. Until our
solution, it was considered an
unsolvable issue. We have solved this
problem in an elegant and compelling
way and… [here comes the hook]…
when you really kick the tires on our
team and our technology, I am
convinced you will find that this company
will lap the competition in the $40B
wireless router space. We will be $100M
company with 40% margins in 24
months.

44 Chapter 4: Game Plan: Part 1. What you Say

 In this example, there is an opening to which the
VC can personally relate. The more real you can
make the issue or problem your company solves,
the more engaged they will become in this
journey.

The function of the Prep segment is to prepare

the listener for your Hook. It is not an excuse to
tell a joke or a funny story. It is not necessarily
time to loosen up the audience or the speaker. If
a joke or funny story helps get the receiver ready
– great, if it helps the speaker loosen up, that is
a secondary side benefit. If, however, everyone
is loose and happy and no one hears the Hook,
then your personal wishes are driving your
choices, not the Result or the needs of the
investor.

Different situations require different Preps. A

presentation to thousands of employees at an
annual company meeting may require an
explosion of energy. A phone call asking for a
meeting clearly needs a different type of
introduction.

What follows are suggestions and guidelines for

the Prep. Each situation must be evaluated
individually, always in the context of the Result,
the Needs and the Hook.

• Prep With Your Hook

Some communications require you to hit hard and
hit fast. To veteran sales staff, for instance, you
might simply say:

The key to making your sales goal is focusing on

new customers.

Note: This may be a good way to start with the VC

The Home Run Hitter’s Guide to Fundraising 45

 community. This type of Prep tends to be pretty
strong and you must be able to express real
confidence to pull this off.

• Establish Common Ground

You need this audience to believe that you have
been in their shoes and understand their needs
before they will hear your Hook. To an exhausted
assembly line crew just before another round of
quality improvement:

Before I got into management, I spent 15 years

working my way up on the shop floor. Every year
it seemed like some new productivity program
would make my job harder and more complex.

• Bring Them Up To Speed

Some of your listeners do not understand what
has happened in this situation up to now. You can
bring them up in an opening.

As many of you know, we are now in the fourth

year of a five-year implementation. Up to now, we
have been delighted with the results of this
process, but we have one hurdle left to overcome.

Note: Be careful not to patronize or overly

summarize. If you know everyone is up to speed,
choose another Prep type.

• Shock Them Awake

Sometimes your receivers need to be challenged
and shaken up a bit to be ready to hear the Hook.
Speaking to the American Psychological Society,
you might get them ready for the hook by saying:

We all know that the talking cure is a waste of

time. One third of your patients get better, one
third get worse, and one third stay the same.

Note: Your Hook had better let them know you are
on their side.

46 Chapter 4: Game Plan: Part 1. What you Say

 • Come Clean
Some times the only way to establish true rapport
and get people ready to hear your Hook is to be
brutally honest and say what no one thinks you
can say. Here I am trying to convince a security
analysts group to give the company's stock
another chance.

I wish I could say we met our earnings goal this

quarter, but we did not.

• The Standards
Define a word: Webster's defines efficiency as …

Give an anecdote or story: On the way to this

meeting I met a homeless person asking for
money…

Tell A Joke: Three religious leaders were in a

boat: a rabbi, a Catholic priest and a Baptist
preacher…

Note: I call them standards because we hear them

time and time again. If it's not fresh, funny, and
inoffensive to everyone in the meeting and
focused on your Hook, don't use it.

Be aware that no matter how you choose to start

a communication, if you don't Prep them for your
Hook, you may confuse your audience and risk
them missing the Hook altogether. When that
happens, it will be harder to get the Result you
want.

Prep Don'ts: – Don't fumble with your laptop and projector

for five minutes while the VC goes for their
fourth cup of coffee.
– Don't distribute a 20-page color document of
your presentation and ask them not to skip
ahead.

The Home Run Hitter’s Guide to Fundraising 47

 – Don't open PowerPoint if you can help it
(although some VC are so used to bad
presentations that they now demand them)
– Don't start with a ten minute historical
overview of your company, your mission
statement, your current capitalization tables,
or the 49ers' chances of getting to the Super
Bowl. The quicker you give them a reason to
believe you can create a high multiple return,
the quicker you will get funded.

I hope you realize that you won't say your Prep

at the end of the meeting – you will say it at the
beginning. But in order to create a strategic Prep,
– just like the rest of your content – it is
developed from your Hook. In fact, sometimes
you can simply open with your Hook. It depends
on who you are talking to, how much time you
have, and what you know about what that
investor is looking for.

The Close You know the Result you want for this particular
meeting. You have researched the VC and you
know what they are looking for. You have greater
insight into your hidden needs that might get in
the way of connecting with that investor. You
have a Hook that brings all of that together in a
powerful statement that makes a promise and a
powerful request and drives the supporting
content. You open with your Prep, drive the Hook
and convince them with your supporting ideas.
Then you thank them for their time and go off to
your next appointment, right?

Only if you want to make it really easy for that VC

to forget all about you.

These investors sometimes sit through a dozen

or more early-stage company pitches a day.
Even if they were jumping out of their seats when

48 Chapter 4: Game Plan: Part 1. What you Say

 they were with you, chances are they won't
remember you or your solution by the end of the
day. Your job is to get these people to take some
action, remember? So at the end of the meeting,
you must ask them to do what you want them to
do.

This process is about selling a big chunk of your

company. If you have ever had any sales
training, you know about the importance of
closing. If you haven't, let me be the first to tell
you: You have to close!

In the old methodology, the "closing section" was

the place for a summary. Summaries remind
people of the most interesting or important points
you went over with the assumption that getting
the other person to remember your ideas was the
goal. As you know by now, this is not the real
goal.

You don't care whether they remember anything

you said. You only care about whether they are
willing to do your Result!

Arguably, thousands of potential deals have

been left on the table because no one asked for
the order.

The Close serves a strategic function in

communication by asking the listener to do your
Result. It can happen in one of two ways.

• Ask for the Order: Directly ask your listeners to

do your Result.

Ladies and gentlemen, when you leave here

today you have a choice to make. I ask that you
vote in favor of the measure I have described.

The Home Run Hitter’s Guide to Fundraising 49

 • Hook 'em Again: Remind them of the WIFM by
restating your Hook. If your Result is explicit
enough in your Hook, the VC should either say,
"Great, let's get you on the calendar" or "I don't
see it. Best of luck."

For all of these powerful reasons, I think you will

agree that the key to making your quarterly goal is
implementing this new program.

You must decide which is best depending on the

Result and the Needs of the investor.

A Note on Remember that part of the power of this process

Summarizing is the ability to move the receiver to action. If, at
the end of this communication, you revert to an
old-fashioned summary, you lose a golden
opportunity to remind them of their WIFM and to
ask for the Result. A summary is a Data Dump
with no action at the end. You may, however,
briefly summarize the most powerful reasons for
doing the Result before you Close.

You should close directly. First, restate the Hook,

then ask directly what more they need before
they move forward.

Close as concretely as you can. Get them to

agree to a date, or have them get you to the
person who does their scheduling. Move things
as far as you can and as explicitly as you can.

This does two important things: it keeps you and

your company from falling through the
administrative cracks, and it shows that you are
a businessperson who knows how to close a
deal. Both bode well for the future of your
business.

50 Chapter 4: Game Plan: Part 1. What you Say

 Always Close for something. If it is clear they
aren't interested, ask them for 10-minute debrief
on what more or different they needed. Ask them
if they would recommend or – better still – refer
you to the resource that would make you more
attractive as an investment or to an investor who
might be more interested. One way or the other,
move it forward. Even if you are disappointed
(and you probably will be, many times before you
get your capital) look for the opportunity to get
some value from the time and the relationship.

Exercise: The Decide whether you will close them

Close directly or indirectly, then write down
your closing statement and know it by
heart. While I typically don't advocate
memorizing, this is one piece of content
you need to be very comfortable saying.
You never know when you will get a
closing opportunity.

NOTE You have to be ready to move the

relationship forward based on what the VC is
giving you – regardless of where you are in the
process.

Key Content I have had the good fortune to work with

Areas: experienced VCs, corporate attorneys and
Attributes of a successful entrepreneurs on coaching teams
Great preparing entrepreneurs for important VC
Business, Not a meetings and public forums. The general
consensus from these insiders is that investors
Great
need to know a handful of core issues about your
Presentation business if you want to be taken seriously.

The Home Run Hitter’s Guide to Fundraising 51

 • Problem: What is the pain your product or service
reduces? The more dire, obvious, expensive, and
ubiquitous the pain or problem is, the better.

• Solution: Specifically, how does your product or

service reduce that pain or solve that problem? It
is not enough to say that you can. You must be
able to explain how – simply, concisely and with
confidence.

• Market Size: The basic question is this: In a

competitive environment, does the market exist to
drive a high-multiple return assuming you can get
a realistic percentage of that market? VCs know
the difference between a market defined by the
entire universe of opportunity in an industry –
software – and the actual market your solution
can reasonably capture – accounting software for
small businesses. You won't dazzle a potential
investor with a trillion-dollar market opportunity if
you can only realistically hope to capture half a
million. If the scale isn't there, the multiple isn't
there, and the professional VCs won't be
interested. This does not mean that your business
can't make you rich – it just means that the VC
world is probably not the right place to look for
capital.

• Economic Engine/Revenue Model/Special

Sauce: What is special about your go-to-market
strategy? What is uniquely valuable to the
investment potential of your business about the
way you will penetrate your market? What is your
"special sauce," that is, why will you grow faster,
bigger and at lower cost than your competition or
the currently available solution?

• Team: It is apocryphal that the due diligence

mantra for the venture community changed
between 1999 and 2001 from "Team, Technology,
Market" to "Team, Team, Team." Apocryphal
because truly great leadership teams always
figure out a way to make money even in tough
markets and investors have always known this is
true. If you and your buddies from undergraduate

52 Chapter 4: Game Plan: Part 1. What you Say

 school have stumbled onto the solution to a huge,
expensive business problem, you are
well-advised to find a few "grey hairs" who would
be willing to lend their expertise and their
endorsement to the enterprise. It is a hard but fair
reality that many investors use the experience
and historical success of a young company's
leadership as the single most important
prognosticator of future success. If you don't have
solid leadership already on board, some VCs will
help you find it, but it will absolutely be at the
expense of your equity and control. Without a
track record of success, your demands to remain
at the helm no matter what, will often be ample
justification for a potential investor to say "Next!"
Teams matter because investors know that the
only mantra that really works in business is
"execute, execute, execute," and that is all about
people.

• Competitive Advantage and Barriers to Entry:

Investors want to know how you compare to the
other choices your customers have and how you
are going to make it harder for copycats to take
your ideas and run with them. First to market,
patents, deep existing relationships with critical
customers and channel partners are all useful in
making a case for the security of your competitive
turf. That said, the only real barriers to entry and
competitive advantage are the creativity, passion
and energy of the people running a business. The
investor must make a gut judgment about whether
you can keep a business out front or not.

This is by no means a comprehensive list of what

you must address in every VC meeting, but some
version of this list keeps coming up in
conversation with industry insiders – and for
good reason. Great businesses are consistently
defined by the right combination of these issues
and attributes. Since most startups don't have
profits, free cash flows or even revenues, the

The Home Run Hitter’s Guide to Fundraising 53

 metrics used for the analysis of mature
companies are replaced by the analysis of some
combination of the items on this list.

Look at this list before a potential investor does

and do your own rough analysis of the strength
and potential strength of your company in
relationship to it. Early-stage investors don't
expect you to have all the answers, nor do they
need a company to be perfect before it raises
capital. But understanding what investors are
looking for helps you both to focus your remarks
on the strengths you have and to get out there
and build the strength you need.

The Elevator As an entrepreneur, you are constantly being

Pitch: 30 thrust into mythical elevators alone with a
Seconds to potential investor who is going up 20 floors in two
Fame and Glory minutes. The fantasy is that if you don't give the
VC a reason to want to learn more by the time
they reach their stop, you will have blown your
one golden opportunity. A tough ride for both of
you.

Back in the bubble days, you could enter elevator

pitch competitions (some still exist today). Each
contest organizer had its own arcane rules and
ideas on what must be articulated to stand a
chance to win a round of golf at Silverado with
the VC of your dreams. Organizers saw nothing
wrong with entrepreneurs developing a 20-slide
PowerPoint presentation for a two-minute micro
pitch. Never mind that it took longer than the
mythical elevator ride to boot up the average
laptop. It was fantasy gone mad.

The value of an elevator pitch is not to test how

much information you can cram into two minutes.
Elevator pitches are terrific indicators of how well

54 Chapter 4: Game Plan: Part 1. What you Say

 you understand your business from the
perspective of potential investors, customers,
partners, etc. If you can't engage someone –
whomever they may be to your business – in a
sentence or two, then you don't understand your
business well enough to be able to deliver a
WIFM.

A good elevator pitch is a distillation of your

Result, the WIFM and the most compelling
answers to the questions that fall from your
Hook. This forces you to think strategically and
surgically excise the fat from the core of your
value proposition. You have to bring the strength
of your company together with the needs of your
listeners and you have to do it fast. Developing a
handful of these pithy little marvels is a great
exercise in deepening your own understanding
of what you are in business for and for helping
you to connect with a wide range of critical
outside partners.

As with many business pop culture phenomena,

the elevator pitch madness has a basis in a real
value-added process. Samuel Clemens - AKA
Mark Twain - once apologized for the length of a
correspondence with, "I would have written a
shorter letter but I didn't have time." Saying
something meaning- fully in a few words is much
more difficult than prattling on for hours.

Here are a few paraphrased examples drawn

from my work with one client as we worked to
pare his company's story to a bare minimum of
words for different situations.

Security and poor power management

cost American business $X billion a year
and residences another $Y billion.
COMPANY-NAME gives residences and
business complete remote control over

The Home Run Hitter’s Guide to Fundraising 55

 the security and efficiency of buildings
and operations. With a team like the '93
Chicago Bulls representing a track
record of repeated start-up-to-liquidity
success for investors,
COMPANY-NAME is poised to make
early partners runaway champions in the
ROI game. Let me tell you more about
this exciting technology and investment
opportunity.

I can say this slowly in 35 seconds. It

works because it asks for the
suspension of disbelief on critical issues
for investors: scale, problem/solution,
leadership and ROI.

Need it said in 20 seconds?

By giving X billion corporate and

residential customers Remote Control
over the $X billion headaches that are
security and utility management from
just about any wireless communication
device, COMPANY-NAME’s proven
leadership team brings a high-multiple
opportunity to early investors and
partners. Come learn more.

Still get the WIFM and the Result, just a

shorter elevator ride.

So what does my client say at a cocktail

party when someone asks him what he
does for a living? Say he is the CEO of a
startup that helps companies manage
security and utility costs? No. He says, "I
am the CEO of Company X. We allow
our customers to use cell phones and
Blackberries to save their corporations
and residences millions in security and

56 Chapter 4: Game Plan: Part 1. What you Say

 utility losses."

The focus is not on what the company

makes, but what it does for customers
and investors.

Elevator Pitch As leaders of a new company, the elevator pitch

Exercise: is worth the time and effort. Good elevator
pitches often become the blueprint for
statements of mission, tag lines and branding
elements. Until you can say it succinctly for half
a dozen audiences, you don't really understand
what you are selling.

Identify four critical audiences (VCs,

customers, channel partners,
prospective directors) and develop a
30-second distillation of the value your
business represents to each of their
individual needs. It should take two or
three iterations before you really boil it
down to pure value. Then practice
saying it out loud, slowly, and record it.
Listen to yourself and see if it sounds
conversational and real. If not, write
another iteration using language that is
authentic for you. When the words you
recorded are compelling for each listener
and sound like you talking, you are ready
to answer the question: "What does your
business do?"

The Home Run Hitter’s Guide to Fundraising 57

58 Chapter 4: Game Plan: Part 1. What you Say
 C h a p t e r

5 Game Plan: Part 2:

What You Show

I had a client who had a series of meetings with

a world-class VC in New York whom she had
been warned would expect to sit back and listen
to a standard PowerPoint presentation.
Essentially he was saying, "I want you to make it
easy for me to say no to you." After experiencing
some pretty dramatic results using the approach
I am laying out here, she was damned if she was
going to fly all the way to New York in order to
have a boring, uninspired meeting with this guy.

The Home Run Hitter’s Guide to Fundraising 59

 So she took her laptop with her, onto which was
loaded a handful of useful slides, but before she
opened it she said, "Before I get started with my
pitch, I want to give you a 30,000-feet overview
of what we are doing." Then she stood up and
made a simple diagram of the problem her
company solved and how they solved it. Two
hours later in a meeting scheduled for half an
hour, she still had not opened her laptop and the
guy she was meeting with had hardly sat down
because he got so involved in adding to and
poking holes in her plan.

She got her capital!

Business people vastly overuse presentation

graphics and nowhere is this truer than in the VC
pitch. VCs themselves sometimes ask for
information on your company in the form of a
PowerPoint file. The problem is this is about the
same thing as an HR director asking for you to
send a resume – it makes it easy to say no. VCs
simply wait until they get the document or the file,
look for some small element that justifies taking
you out of the running (typo, market size,
anything they choose), have an administrative
assistant call and drop the ax.

Because they are almost never the result of a

strategic planning process, graphics-heavy
presentations always get between you and the
VC. You are not being told to leave out visuals in
your meeting, but there are good and bad
reasons to use visuals and good and bad ways
of using them.

60 Chapter 5: Game Plan: Part 2: What You Show

Lousy Reasons Most entrepreneurs use visual support for the
to Use wrong reason. But whether it is fear, haste or
Graphics following the Joneses, make sure you don't fall
into any of these traps as you complete the Ideas
side of the communication triangle.

Lousy Reason 1: You need something to hide

behind.

Executives in just about every business situation

these days rely too heavily on graphics. It may be
that folks get a greater sense of security if they
don't have to see the faces in the audience and
they may feel more comfortable with their
content projected onto a screen for them and
everyone else to see. This process robs you of
your ability to have real impact and connect with
a VC.

You worked hard to get the meeting with the VC

in order to develop and deepen a relationship
with someone you hope will become one of the
most important members of your team. You
wouldn't give a PowerPoint presentation on your
life and family on a first date. You might show
pictures of your friends and family at some point,
but first you have to get a sense of chemistry. An
early meeting with an investor is similar. Don't
use PowerPoint to avoid what you came for – a
connection.

Lousy Reason 2: Everyone else does it this

way.

Actually, they don't. The most confident,

experienced business communicators don't rely
on pre-set presentation graphics because they
know the best of these meetings may take
unpredictable turns. Many of my clients
purposefully jump up and diagram ideas that

The Home Run Hitter’s Guide to Fundraising 61

 need to be made visually on a white board or a
flip chart. The reason this process works better in
many situations is that the visuals that come out
of it are immediate, spontaneous, and are
typically in response to a need that listeners may
have about the ideas you are sharing.

If you think about the most important

conversations or meetings in your life, I would
bet that not many of them included a digital
projection unit. In fact, even in business the most
sophisticated, confident and effective
communicators don't use graphic-driven
presentations. But here is the real kicker. In a
world of PowerPoint-wielding frogs, the brave
soul working to make a connection based on a
mutual proposition of real value will look and
sound like a handsome prince. One of your big
hurdles with the VC community is to be
remembered, and using a software program that
comes preloaded on just about every Windows
PC on the planet does nothing to differentiate
you.

Many presenters at industry and venture forums

actually prescribe the use of PowerPoint (down
to the number of slides) – not because the
graphics add value, but because they give the
forum facilitators a modicum of control over the
density and arguably the quality of the
presentation. Read between the lines and you
will see that the instructions from the forums do
not require you to use graphics and that time
allotments are maximums not minimums. Every
now and then you will see some brave CEO
(often of the serial success variety) stand up with
no visual support and he will get pin-drop silence
during the talk, a standing ovation and top marks
for the presentation. That is what leadership
looks like and it is worth working and preparing
for.

62 Chapter 5: Game Plan: Part 2: What You Show

 Lousy Reason 3: You need help remembering
your content.

This may be the most important meeting of your

company's young history. If you don't know your
company well enough to sell it, you are not ready
for this meeting. Do your homework.

By the way, there is absolutely nothing

unprofessional about using notes. The president
of the United States uses notes when he reads
off his teleprompters. Have a typed outline with
some bullets to remind you of key concepts or
numbers if you need them.

A typical PowerPoint presentation has

everything you plan to say written on the screen.
There is no reason for a potential investor to read
along as you read.

The VCs you talk to know how to read. Nothing

is more patronizing than having someone read
something out loud while you are reading to
yourself. Presented this way, your graphics
literally create a competition between you and
the screen onto which you have projected your
presentation. No matter how brilliant you or your
slides are, either you or your presentation
graphics is going to lose that competition.

If you have determined that having a VC read

about your company is the best way for you to
get your capital, then just send it to them and let
them skim it at their leisure. This way the VC can
look at all 40 slides at once and dismiss your
company without ever having to meet with you.
Sure saves time!

The Home Run Hitter’s Guide to Fundraising 63

 Lousy Reason 4: People remember more
when they see and hear than when they just
hear.

Absolutely true. And if you were trying to help

these people pass an exam, showing them slides
might help them take better notes so that they
could take them home and study them. Better
still, e-mail them your text slides and give them
an exam on your company when you get there
for your first meeting! Remember, this process is
not about education. It is about connecting and
moving others to action.

Strategically, it does not matter whether they

remember a single word of what you have said.
If the other person in that meeting is willing to do
what you want them to do at the end, you have
been successful. If they remember what your
company and product does, but they are
unwilling to take the next step, you have failed. At
any given point in a meeting, you should be less
worried about retention than about how well they
are on track with you. Are the VCs with you in this
moment? Are they willing to move with you to the
next point? If your visuals are genuinely the best
way of creating and maintaining connection and
momentum, then they are useful. Otherwise they
are in your way.

PowerPoint Is Now that you are scared the about using

Not a Crime. PowerPoint (or maybe just mad as hell), let's talk
about how graphics in general can be used to
add value.

64 Chapter 5: Game Plan: Part 2: What You Show

 When should When the people in your meeting need or
you use demand them.
visuals?
Many VCs are now so inured to bad PowerPoint
(or whatever the graphics program of choice may
be), they have fully accepted it as the industry
standard and in fact may demand it. Some will
become visibly uncomfortable if you don't start
your meeting by booting up your laptop. Some
will request that you send your "presentation" for
review prior to the meeting. Since "The Home
Run Hitter's Guide to Fundraising" is built on a
foundation of meeting the needs of the investor,
refusing to bring a computer to a meeting or to
attach a PowerPoint file to an e-mail because
this book challenges its value won't help you get
your capital. On the other hand, fifteen years of
coaching and consulting with highly successful
business people – including some of the very
VCs you want to speak to – have convinced me
that following the herd is a prescription for a long,
painful capital-raising campaign.

Just like everyone else in the business world,

VCs are victims of the arbitrary escalation of the
use of technology in presentation graphics. From
an effectiveness standpoint, most of us are
worse off using computer graphics than we were
when painting animals on cave walls was the
technology standard. The bottom line is that the
meetings where people just talked to each other
worked better then and they still do now. We
sized each other up as people. We argued. We
jousted, connected or failed to connect. We
invested, or chose not to, but did so in the
context in which businesses operate – human
contact. Our ability to differentiate our
capabilities as leaders and thinkers was never
greater than when we had to rely solely on who
we were and what we knew.

The Home Run Hitter’s Guide to Fundraising 65

 Using Graphic Before PowerPoint and other graphics programs,
Supporting we had to give great thought to the use of visual
Tools support material because they required a special
Effectively talent and were expensive to develop and
deploy. Visual aids were developed as a last
resort based on some barrier presented by a
concept or idea. "This will take forever to explain"
or "they really have to see this to understand it"
drove the thinking behind the use and
development of the support tools. In the good old
days, a picture really was worth a thousand
words.

Many of us still labor under the delusion that a

presentation developed in PowerPoint is somehow
more efficient and concise. With strategic thought and
planning, they could be. As they are typically used in
boardrooms and in e-mails across the country right
now, they are a monumental waste of time and energy.
See How PowerPoint Ruined The US Economy on my
Web site at:
dansappassociates.com/pdf-files/how-ppt-ruined.pdf

Ask yourself the following questions to make

sure you are using those tools in the right way
and for the right reasons.

1. Graphic Support Tools: Yes or no?

Do you use visuals or not? You do have a choice.
Arriving at your next VC meeting without a laptop
does not mean you will be considered
unprepared. The context of a meeting
sometimes drives the decision for you. Many of
the most meaningful business meetings, VC
pitches and otherwise, happen in restaurants,
taxicabs and hallways. Even though people may
try, spontaneous meetings in hallways and
taxicabs are not great places for PowerPoint.
The type of relationship you have with the VC
and the quality of the introduction that got you the
meeting can also impact your willingness to “just

66 Chapter 5: Game Plan: Part 2: What You Show

 talk.” But especially in small, intimate, early
meetings, your willingness to use as little support
as possible can speak volumes about your
presence and leadership. You simply don't see
confident, senior leaders relying on
computer-generated graphics to make
connections and neither should you.

If you know the VC is absolutely addicted to

PowerPoint, you don't want to confound their
expectations and take them out of their comfort
zone on principle alone. However, if you are
radically driven by the needs of the other people
in the meeting and you evaluate the ideas you
have selected to share from their perspective,
you will be in a good position to evaluate whether
to use visuals or not.

2. What Type?
What kinds of tools am I talking about here? Just
to stimulate your imagination, here is a list of
media that can be put to good use during the
course of an effective business meeting. The list
is limited only by logistics and your imagination.
I know an investment bank that had their senior
bankers dress in tie-dyed t-shirts and do a
can-can in order to make a connection with a
very young management team preparing to take
their company public. It worked, and the bank
was chosen as lead underwriter.

– A cocktail napkin, back of a business card

(great pitches happen in bars, restaurants,
taxis…)
– A taste or sample
– A photograph
– A flip chart
– A 35mm slide projection
– A PowerPoint slide
– Your product
– An audio clip

The Home Run Hitter’s Guide to Fundraising 67

 – A live action film
– An animation
– A newspaper clipping or magazine article
– A customer or testimonial
– A relaxation and visualization led by the
presenting executive

PowerPoint and its computer-generated

brethren are not the only games in town.
Remember that part of the challenge in your
meeting with VCs is creating sophisticated,
value-added differentiation. It is extremely
difficult to get real differentiation from the same
pre-loaded graphics program driving each of
your competitor's presentations, no matter how
well you use it.

3. What Purpose?
As a strategic resource, visual support tools must
solve a problem for the people in your meetings
or they will become part of the problem.

If the conversation you are planning with a VC is

going to be truly strategic, you must use the
same litmus test for developing and using visuals
that you used for developing the message and
the supporting ideas for the meeting itself: "What
must my listener experience, right now, to be
more able or wiling to go with me and do my
Result?" If the answer is "something more than
words," then you have the right agenda to
develop a graphic tool.

Some VC-focused reasons to use a non-verbal

tool:

Clarity and simplicity:

Sometimes the ideas you want to share are
so complex that words alone cannot explain
them. When you look at your content outline,

68 Chapter 5: Game Plan: Part 2: What You Show

 put a check mark next to the ones that might
be difficult to understand from the
perspective of an uninformed outsider. If
words alone can't make critical ideas crystal
clear and A-B-C simple, then this is probably
a good place for some sort of graphic
support.

Making the abstract real*:

Some of the ideas you need to share may be
highly conceptual and obtuse until you can
actually see what it looks like or how it works.
When the conceptual nature of an idea is a
real impediment for the VC to overcome
some cognitive hurdle, then some visual
support is appropriate.

* Caveat: A demo of how a product works is

not the same thing as a visual representation
of the value of the solution to an investor.

Creating a mood:
In most meetings, you won't have the time
nor will the VC have the patience for this. But
in a public forum, you may want to evoke
certain emotions in order to get the audience
moving in the desired direction. Fundraisers
and politicians frequently use visual tools for
this purpose. A photograph of a starving
child not only reinforces the facts, but also
creates an emotional response. University
fundraisers often show a montage of their
campus in a way that evokes nostalgia for a
potential donor.

Overcome language barriers:

Sometimes language – national, regional,
industry and intra-company – can present
such a hurdle that a visual representation is
the fastest, most effective way to a meeting
of the minds.

The Home Run Hitter’s Guide to Fundraising 69

 Reinforcement:
In many meetings, a few key ideas must
stand out from the rest in order for an
investor to draw the necessary conclusions.
These ideas may need some sort of
non-verbal support. Reinforcement can,
however, be a real Pandora's box.
Sometimes an entrepreneur falls in love with
every idea he plans to share and concludes
that every idea must be reinforced visually,
which is now the industry standard – a
PowerPoint slide for every idea. When
everything is at the same level of importance
for your VCs, nothing seems particularly
important. Close up, a blade of grass is a
singular miracle of nature. From six feet up,
a freshly mown lawn is just green. When you
try to reinforce everything, you end up
reinforcing nothing.

4. Which ideas need support?

Once you have decided whether or not you will
use some kind of visual support tool and you
know why, only now is it time to identify which
ideas need some sort of support.

Quite simply, you must go back to your Result,

your VC needs assessment and, of critical
importance here, your assessment of your own
needs. If an idea represents a real hurdle for that
VC to move towards your result and you can only
overcome that hurdle visually, then you must use
some sort of graphic support for that idea. Make
sure you check your own needs at the door,
because the habits of even some of the most
educated entrepreneurs are to show a visual at
every opportunity.

70 Chapter 5: Game Plan: Part 2: What You Show

 Visual Result You have a strategic process for identifying
whether, where, and why you might use a
supporting tool. Now you must ask the strategic
question, "How do I want the VC to respond
when they see it?" I call this your Visual Result.

A Visual Result is the specific conclusion the VC

must draw after seeing this visual or graphic. For
instance, when your VC sees this visual, they will
believe that the Total Available Market is $40
billion for your product or service, or it will be
clear how gene matching using an electric
connection is more efficient than using gas
spectrometry. Your visual provides reinforce-
ment or clarification.

Headlines Your next challenge is to articulate your Visual

Result as a headline instead of a title. For
instance, "4th Quarter Profits," "Revenue Model"
and "Leadership Team" tell us what is on the
slide, but not what is important, relevant or
compelling about the information.

A more strategic method is to leverage the power

of headlines. A good newspaper headline tells
the heart of the story in a few well-chosen words
and draws explicit conclusions for the people
reading them: "US says enemy fire brought down
helicopter in Iraq." You almost don't need to read
the article because you have the gist of it in the
headline. If you see a billboard that says, "Taste
great, less filling" and you see two cans of light
beer from Miller, you have the whole story. In
fact, billboards are another great metaphor for
how to develop powerful, useful, graphic support
tools.

The Home Run Hitter’s Guide to Fundraising 71

 You don't want your VC reading your content
from your slides – you want them listening and
responding and hanging on to your every word.
A good headline in a presentation graphic
articulates a conclusion for the person on the
receiving end of the presentation and makes
designing the supporting graphic much simpler
and more effective. Your headline tells that VC
exactly what you want them to know in a few
words, with impact.

A title that says "Four-Year Financial

Projections" forces the VC to scrutinize the data
for a conclusion. A headline that says "Year 4
Profits Top $100M" over a visual of an almost
vertical profit line in your graph prompts your VC
to wonder, "How are they going to pull that off?"
– which is exactly what you want them to ask.
Sometimes you don't even need to print your
headline in the visual. Some of the most
compelling headlines are spoken.

You don't have to be an advertising expert to

develop good headlines. Just ask yourself,
"What specific conclusion (time, volume,
revenue, profits, market penetration, etc.) do I
want the person I am speaking with to draw?"

Before you start drawing or creating bar charts,

do the following exercise to create an effective
headline for each of the graphic support tools
you have identified.

GST Exercise Headline

What is the single result, take away, or
conclusion you want the VC to have as a
result of seeing this visual? Work to
articulate that conclusion in a headline of
no more than five or six words. Look at

72 Chapter 5: Game Plan: Part 2: What You Show

 your newspapers for example of
headlines and work to make yours
equally attention-getting.

Give your visuals a good strong headline and

then illustrate them simply. If you can't make it
simple – visually or verbally – then you don't
really understand it.

The Magic This is what you have all been waiting for – the
Number secret to the right number of slides per minute
throughout the meeting. Right? OK. Here is the
absolute formula:

As few as you can get away with and as

many as the people you are talking to need.

If your business truly warrants capital and you

can't get an investor without opening your
computer, then you don't know your business
well enough to ask for venture capital. On the
other hand, when you plan your meeting with a
genuine sensitivity to the needs of the VC, and a
handful of simple, powerful graphics help your
business come alive in a way that words alone
couldn't, then visual support is absolutely the
right choice.

Cocktail The best support tools are an organic part of a

Napkins and business meeting. The next time you are in a bar,
Billboards watch the people who are deep in conversation.
You might see one person pull out a pen and
draw something on a cocktail napkin in order to
illustrate the point being made. This is a great
metaphor for the effective use of visual tools.
One person recognizes that the other person is
having a difficult time understanding a concept,

The Home Run Hitter’s Guide to Fundraising 73

 so he draws a picture with whatever he has at his
disposal. An attorney friend of mine once
defended a rock band against a roadie who
produced a pie chart drawn on a cocktail napkin
as evidence of an explicit contract of a
partnership. Your visuals do not have to be
sophisticated to do their job. Use the cocktail
napkin metaphor as you are choosing which
ideas to support and you will probably be OK.

Developing effective, simple visuals is a much

greater creative challenge than doing a visual
Data Dump. Advertising agencies are paid
millions to keep it simple and make it work. The
advertising world gives you another powerful
metaphor as you begin to design your visuals.
Imagine that the people in your meeting are in a
car on the freeway driving at 75 mph. Every now
and then the car passes a billboard. If that
billboard is well designed, everyone in the car
draws the same conclusion because of the
powerful, pithy headline. The graphic element
then instantly illustrates that conclusion. All of
that has to happen quickly enough to have
impact without causing a pile up on the freeway.
Make your visuals into billboards and they will
have impact without wrecking the connection.

74 Chapter 5: Game Plan: Part 2: What You Show

 C h a p t e r

6 Managing the Game:

Facilitating a
Successful Meeting

The Ideas side of the Communication Delta

Model triangle is now complete. But before we
start working on using your body and voice for
maximum impact, it is important to look at the
types of situations you are most likely to be in
when you meet with a VC.

Most of the time, you will be meeting in the

relatively informal confines of an office or
conference room. Usually you will go to them;
sometimes they may come to you.

The Meeting: Hopefully, the vast majority of the interactions

Facilitating an you have with potential investors starts in either
Important their office or yours. The more contact you have
Conversation with these folks, the better your chances are.
"The Home Run Hitter's Guide to Fundraising"
planning process is based on the assumption
that you are planning an important conversation,
not a formal speech, but it works even if it is a
conversation with 1,000 people.

You won't get your capital until you get a VC into

an office. Just about everyone who raises VC
funds needs to be able to make these intimate
meetings work.

The Home Run Hitter’s Guide to Fundraising 75

 Make it Most of the time, you won't say exactly what you
Conversational have planned to say in the exact order you
planned to say it. Once you have a few of these
small meetings under your belt, you will realize
how fluid and truly conversational they are. In
fact, a sure sign that the people on the VC side
of the table are not engaged, is if they sit silently
and wait for you to finish your presentation. If the
time you have with a potential investor feels like
a presentation, you have left money on the table.

I urge you to think of yourself as a facilitator in

these meetings. A facilitator's role is to manage
the process of a meeting in a way that leads to
an identified Result. You have responsibility not
only for the process (the way the meeting works)
but also the content (what gets said).

Part of your job as the meeting facilitator is to

create the experience of a valuable, purposeful
conversation. Valuable because the VC should,
very early on, understand the opportunity
represented by a deepening relationship with
you and your company. Purposeful because
everything you do and say is part of the process
of closing the gap between the needs and
interests of a potential investor and the result you
want from that meeting. It is a vibrant exchange
of value and opportunity.

Facilitation 1. Don't waste their time.

Tips for the VC We know these folks are busy. If you spend
Meeting 15 minutes of your half hour talking about
the baseball playoffs, don't expect them to
give you more time to sell them on your
business. Once the relationship is
underway, you have plenty of time to talk
baseball. This does not mean that you
should be brusque or abrupt, but the most

76 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 powerful way to engage these people is with
a high return opportunity to make their LPs
smile.

2. Don't force your agenda.

Once your meeting is underway, you may
realize that the needs for this VC are quite
different from what you anticipated. If so,
the Communication Delta Model gives you a
tool for a quick, mental recalibration.

If that VC is different from what you

expected, your initial Result may be
unachievable and the Hook you planned
won't work for this individual. Don't panic!
Catch your breath, ask the VC what is
important to them and test another Hook
right then and there. With presence and
practice, the thinking process behind "The
Home Run Hitter's Guide to Fundraising"
will become intuitive. Your revised Result
and Hook don't have to be works of art, but
they do have to work for your VC. Under
pressure (and you will feel pressure,
especially in the first few VC meetings), you
are likely to retreat to behaviors that are
safe and comfortable to you. Sticking to
your script no matter what, may make you
feel more comfortable (your need) but it
may well build a wall between you and your
capital.

A client of mine in the insurance business used to

take pride in the fact that he would glibly start
each presentation by telling his prospect that they
could ask questions, but if answering took him off
track he would have to start the whole thing over
again! He thought it was kind of funny. I thought it
was funny too, but I also realized he wasn't kid-

The Home Run Hitter’s Guide to Fundraising 77

 ding and that he had so memorized the content
that it had virtually lost meaning for him. If it didn't
seem to have meaning for him, I guarantee it
didn't have meaning for his potential clients.

3. Check the process with probing

questions.
If you are not sure your approach is
connecting with your VC, just ask them.
Have the courage to express your
perception of their reaction. For instance: "I
can't tell whether this is interesting to you or
not. Is there a part of this that doesn't make
sense or that you disagree with?" or "It
looks like there is something that you aren't
quite sure about. Is there something you
disagree with?" You don't have to apologize
to check in. Delivered well, these process
checks can help you look more confident
and in charge. Without these probes, it is
difficult to know how you are doing. Most
VCs won't start nodding their heads like a
bobble-head doll even if they really love
your business. The more you lead these
meetings in a way that creates efficiency
and value for the VC, the more you seem
like a leader. Nothing says you are a leader
like leading.

Caveat: Some VCs are in such a hurry and

are so jaded by lousy presentations, that
they will force "bad process" on the
meeting. They will demand to see your
PowerPoint while you talk and they will
summarily dismiss any attempts on your
part to facilitate the meeting. When you run
into this brand of VC, stay the course
defined by this book. Even if you can't see
it, these folks with seemingly impenetrable

78 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 blank stares are responding to the choices
you make. Due to the frog-kissing nature of
their business, many VCs use a completely
neutral physical posture as a defense
against getting warts. It simply takes too
much energy to become physically involved
in all 12 of the presentations they will see
that day. Don't let their habits drive yours. If
you feel real antipathy with a potential
investor, your chances of deepening that
relationship are small and possibly
ill-advised. You may have to kiss some
frogs too. The good news is that good VCs
are in the pond as well.

4. Overcome objections.
I have a friend and business associate who
now directs a very progressive business
incubator but who cut her teeth in business
as the CEO of a successful technology
startup. This was a good company that
raised millions in venture capital and turned
that capital into lots more when it was
acquired at a healthy multiple. It took her 75
meetings with VCs to get the capital she
needed to grow her business.

You may have to overcome all kinds of

hurdles in seeking VC funding. Some are
hurdles that you have to deal with by looking
for another investment partner. Some are
hurdles you can work to overcome in the
course of a meeting.

In these meetings, you will face challenges,

questions, doubts and even disbelief. While you
don't have control over how a VC responds to
your ideas and projections, you do have control
over how you deal with their responses. When
challenged, most people respond in some pretty

The Home Run Hitter’s Guide to Fundraising 79

 unconscious ways. This is especially true when
we are under the kind of stress associated with a
meeting with a VC. For instance, common
responses may be:

– Defensive – "You don't know what you are

talking about! Our research is unassailable!"
– Fearful – "Well…maybe you are right. You
probably know more about this than I do."
– Analytical – "Gartner's research suggests
these numbers are accurate."
– Passive resignation – No response, moving
on to the next bullet point in the outline.

All of these responses leave opportunity on the

table. If you don't explore them, you can't find out
whether these objections are personal bias,
actual experience with a similar product, idle
intellectual jousting, or a deal breaker. These
response patterns will not help you move the
process of this meeting toward the result you
want.

Embrace resistance and objections as an

opportunity to deepen your understanding of the
investor's perspective, thereby deepening the
connection. At the same time you can use these
bumps in the road as a measuring stick for
gauging the distance between where the VC is
now and the result you want. You "gauge and
advance" by interpreting these objections with
probing questions and testing out closes. For
instance:

VC: Your market size seems way out of

whack to me. Where did you get these
numbers?

80 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 You: (probing question) I am pretty
confident about the quality of the number,
but is your concern that the market is not big
enough or that we missed something in the
research?

VC: No, I know the opportunity is there, but I

am curious about the methodology you used
to assess your opportunity. Is this bottom-up,
top-down, or what?

You: (closing question) If you were

comfortable that we could capture the
number we are proposing here, would this be
more interesting as a potential investment?

VC: If you can convince me that you can get

that number, you would definitely whet my
appetite.

You: (testing close) Our research is

complex and deep and it may take more time
than we have scheduled to put it through the
fine tooth comb. Can we carve out some
more time today or should we schedule more
time on another day?

Even if you are only four minutes into the

meeting you have discovered an objection that
has allowed you to better understand the needs
of this investor. If having them agree to another
meeting or begin some initial diligence on your
company was the Result you wanted, then you
have arrived sooner rather than later.

The Home Run Hitter’s Guide to Fundraising 81

 5. Listen for closing opportunities.
Gauging, deepening, and closing around
challenges and objections keeps a meeting
moving, but it is also critically important to
know how and when to bring a meeting to a
Result. Remember that this meeting is one
step in the development of an important
business relationship. Keep your Result in
the front of your mind, not hidden behind
your content. You don't get extra credit for
saying everything you had planned to say.
Your only payoff comes when the other
people in your meeting agree to do the
action in the Result you have identified.

When you sense excitement and real

interest in moving forward, have the
courage to check in with that VC and see if
they are ready. I can't tell you the number of
opportunities that have been lost because
an entrepreneur over-talked an idea. Sales
are lost everyday because the "script" didn't
request a call to action until the end. You
don't have to be a used car salesman to
close someone. If you can't close these
folks when it is time, you will never get your
capital. Many times, the only way you know
it is the right time is by asking.

Smart investors would rather have a

hard-driving businessperson at the helm of
a portfolio company who happens to know
product development than a technology
wizard who decided to try to build a
business around a product. Investors tell
me that leadership is by far the most
important intangible in their evaluation of
early stage companies. Without real
leadership, even mature Fortune 100
companies flounder and fail. Leaders move
the people around them to action.

82 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 Facilitating your VC meeting to a result
requires leadership. I would rather have you
go down swinging for a close – and so
would smart investors – than have you
politely thank them for their time.

6. Create visuals on the fly.

Sometimes creating visuals as you go is the
best way to go. I am not suggesting you
shouldn't prepare, just that you let your
support tools materialize organically – when
the VC needs them – in the course of the
meeting. Practice drawing your visuals on a
dry erase board or flip chart paper. You
don't want to do anything for the first time
under pressure, so get good at creating
your graphics on the fly. This is also a
wonderful place to invite the VC to get out of
his chair and add to, subtract from, or
change your visual in a way that allows
them to collaborate, challenge, and engage
in a very different way.

7. Collaborate.
Don't underestimate the value of having a
smart, seasoned business person focused
on you and your business. Your relationship
with a good VC will be collaborative. This
means that during your meeting, your VC
will probably challenge you to change
certain aspects of your business plan or
product in ways that can make the
difference between success and failure.
Explore those possibilities and use testing
closes around those issues – "If the
business plan included this revision, would
you be more likely to invest?" Even if a
particular VC doesn't invest, you can still
get tremendous value from the meeting.

The Home Run Hitter’s Guide to Fundraising 83

 Managing In a meeting at a VC’s office, you will be lucky to
Q&As go 30 seconds without interruption and
questions. Believe it or not, that is a good thing.
You should be concerned if a VC lets you talk
uninterrupted for ten minutes at a time. It
probably indicates that they are either lost or
disinterested. So questions should be an
expected part of the give and take in the VC’s
office, but Q&As in a public forum is a bigger
challenge for many entrepreneurs.

Some entrepreneurs are terrified of Q&As

because anyone can ask just about anything
they want. Others love Q&As because it feels
less like a presentation and more like a
conversation. Happily, the Communication Delta
Model also contains the seeds for successful
Q&As. With your Result in mind and your Hook
at the ready, you are in a tremendous position to
get your core message out there and begin
reinforcing your promise. For those of you who
find Q&As challenging, trust that the more
practice you have transforming presentations
into conversations, the more you will look
forward to the final minutes of your talk so you
can jump in and start deepening connections
with Q&As.

Q&A: A Five Step Method

Before you can apply this simple method, you
must be clear about your Hook or core value
proposition for this audience. Media coaches
often help executives develop several
"messages" that basically lead back to the same
place but keep an executive from sounding either
like a one-trick pony or a broken record. If you
want to try to sell more than one message in your
Q&As, make sure they are all congruent with

84 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 your Hook and the result you want for this talk. If
not, you will probably get lots of follow-on
questions you don't want to answer.

Once you know the ideas you want to try to get

to in your answers, the following process can
help you get there.

1. Listen silently and breathe. In

conversation most of us aren't really
listening. We are thinking – hard and fast –
about what we are going to say next. When
we are thinking of our response, we are not
fully hearing the question. As a result, we
are missing valuable insights into how to
connect and how to get to our messages out
there. Listening without speaking while we
breathe to release tension, puts us in a
powerful state of readiness to answer in a
way that creates value both for you and the
person asking the question.
2. Pause. You will learn more about the power
of silence in the section on Physical
Strategy, but for now simply practice putting
some silence between the end of the
question and the beginning of your answer.
A purposeful pause gives you time to think
and validates the quality of the question
better than the rote expressions like "great
question." You are not in a position to
suggest one question is good or bad. Use a
moment of silence to evaluate the question
first, and then in silence, develop your
response.
3. Evaluate in silence whether it is a question
that can be answered as is or if it is one that:
– needs clarification – "Let me make sure I
understand what you are asking here."

The Home Run Hitter’s Guide to Fundraising 85

 – needs reframing because it contains a false
premise – "Your question assumes the
market for wireless devices has peaked and
our research shows we are at the very
beginning of the maturity curve. So I can't
really answer the question the way you've
asked it, but our market research
suggests…"
– shouldn't be answered for competitive or
legal reasons "I can't answer that because
this really is our secret recipe, but I can tell
you…"
– you don't want to answer because you
would be required to have a crystal ball to
know the answer, or
– you don't know the answer – "I don't know
the answer to that; I will have to find out. Give
me your card and I will research it and get
back with you."

Once you know what kind of question you

have fielded, you are comfortable that you
can and should answer, and you have the
answer (all in silence…with practice this will
take a second or two), then it is time to
compose your response and...
4. Answer directly and concisely. "Yes, we
are on schedule for a hard launch on
Monday," or "325,000 so far," or "All of our
developers are in Sri Lanka." This will then
give you an opportunity to …
5. Bridge to your message. "This is not
something we are simply hoping to do. Our
investors will see things happen quickly." Or
"…At that volume, we are cash flow
positive. In four months we will ramp to ¾ of
a million and be profitable," or "In this way
we maintain better than six sigma quality at
a 40% reduction in HR costs compared to
our next nearest competitor and create an
even bigger hurdle for new competitors
jumping into this space."

86 Chapter 6: Managing the Game: Facilitating a Successful Meeting

 With practice, this process becomes absolutely
second nature. Watch politicians as both
masters and hacks of the trade. It is a core
competency for anyone who frequently deals
with the media to be able to generate a
print-worthy quote or sound bite on the fly.
Masters are always quoted on the issues they
are trying to sell; hacks just sound like they are
trying to sell.

The As the leader of a young company looking for

Suspension of capital, your job in an investor meeting is to move
Disbelief someone from one state of being to another.
Until the relationship has deepened and both
parties are ready for a marriage proposal, your
job is to identify what you want for a next date
and what that VC needs to hear to be willing to
say “yes.” They don't have to know everything
about you or your company to make a second
date. In fact, everything would be an overload
and a barrier to moving forward in most cases.

At every stage in the relationship, however, an

investor does have to change from thinking
"probably not" to thinking "maybe so." In fiction,
accepting an improbable reality is called the
"suspension of disbelief." The reader doesn't
have to believe in order to engage with a story,
they just have to not disbelieve. While your
company is not fiction, the probability of a
significant return may be hard to believe early on.
In the early stages of this relationship, you need
to close for the "suspension of disbelief." The
Communication Delta Model can help you move
a VC all the way from disbelief to writing a check,
but it has to be accomplished one step at a time.

The Home Run Hitter’s Guide to Fundraising 87

88 Chapter 6: Managing the Game: Facilitating a Successful Meeting
 C h a p t e r

7 The Swing: Delivery

for Impact and
Influence

Like it or not, most of your ability to have impact

and create change in other people comes not
from what you say but how you say it. We are
hard-wired and conditioned to respond to some
people and not to others. We make very quick
and often intractable judgments about the people
we meet. Understanding the human tendency to
judge as you develop your own ability to control
the impression you make, gives you
extraordinary power to influence the people you
talk to.

The Home Run Hitter’s Guide to Fundraising 89

 While it is impossible to get the skill you need
from a short book on the physical side of
communication effectiveness, you do have to
make sure that everything about the impression
you make physically is as compelling and
strategic as your ideas. What follows are a
handful of tips and choices to consider. If you
want help mastering this side of the equation you
can learn about coaching, seminars and
workshops at www.dansappassociates.com.
With the right training and practice, every time
you talk becomes an opportunity to drive your
company forward.

A Strategic Framework

Impact: The I have spoken with hundreds of groups and

Impression of thousands of individuals about the idea of a
Greatness physical goal, and the similarity and consistency
of the impressions we all want attributed to us is
compelling. While it may vary somewhat from
culture to culture, by and large we all want the
same things said about us, and most of us have
a highly consistent yardstick for measuring what
it takes to really engage people. It doesn't mean
that we have to like them or agree with them, but
people who engage us share certain
characteristics.

At this point, we are not talking about how you

feel; we are only talking about how you look and
sound to other people.

For the most part, this is how most of us want to

be seen.

90 Chapter 7: The Swing: Delivery for Impact and Influence

 Smart Organized Intelligent
Knowledgeable Professional Personal
Interesting Real Charming
Confident Energetic Amusing
In Control Passionate Like a leader
Impressive Focused Engaging

I have further refined this list to a handful of

critical characteristics that must be present if you
are going to have influence and impact.

The Essence of Impact:

A few common characteristics must be present
to make a real impact on your listeners.

Real
You don't have to be Tony Robbins, Tom Peters,
or Zig Ziggler to hold people's attention. Do you
have habits you need to change in order to
connect and have influence? Probably. Does
that mean you can't be completely who you are?
Absolutely not. In fact, no matter how dazzling
your business plan, how large your market, or
how proven your team, the VC you are meeting
has heard it, seen it and challenged it before.
The only real differentiation you have is who you
are. This is why the physical side of "The Home
Run Hitter's Guide to Fundraising" and the
Communication Delta Model is so strategically
important.

The Home Run Hitter’s Guide to Fundraising 91

 Yes, you have to be real. But you can't just say
"Hey, this is me" and hope for the best. You have
to make the choices that allow you to put your
best foot forward and maximize your capabilities
every time you talk. If you are not willing to
experiment with your habits and your physical
comfort zone, I promise that once again, you are
leaving money on the table.

Do you have to change your personality? Only if

it doesn't allow you to make the most of who you
are. From years of study and experience in
clinical psychology, coaching and consulting, I
can tell you that what we describe as our
personality is the progressive shaping of certain
tendencies, reinforced with years of repetition
until they become habits. What were affectations
as children become our personalities as adults
and annoying quirks as old folks. If your
personality keeps you from connecting, then you
may have to work on the expression of your
personality if you are going to get what you want
as a business communicator.

NOTE If you aren't willing to change your

behavior, the habits that got you where you are
will keep you where you are.

Strength
At your best with a VC, you must appear to have
the right to be in that meeting and the right to say
what you are saying. You must seem
comfortable taking up all of the time and space
you need, and you must seem completely
comfortable in your own skin. The people in your
meetings must experience your strength
regardless of your age, experience, the situation,
or even how you feel in the moment.

92 Chapter 7: The Swing: Delivery for Impact and Influence

 You don't have to seem aggressive or pushy or
rude to express your strength. In fact you had
better not. But you certainly cannot seem to be
asking for permission.

– A strong body is balanced, solid, forward,

open and relaxed.
– A strong voice is clear and audible but never
shouted and never in hurry.
– Experienced, strong leaders take their time
and are comfortable with silence.

Other words often associated with strength

include expressions of power, confidence,
authority, and control. But you can't afford to wait
to feel your strength before you express it.

Passion
Strength is the cornerstone of leadership, but
without an expression of passion, strength can
seem distant, matter-of-fact or even wooden.
Every entrepreneur I have ever worked with
swore to their complete and utter commitment
and passion for their company. But it is not
enough for you to feel passionate. If you are
going to have real impact, the people around you
must experience your passion. The people you
talk to will feel secure in your strength, but will
only be drawn in by the expression of your
passion.

An expression of your real passion is not the

same thing as enthusiasm. Enthusiasm may
seem unfocused and often seems false and
fleeting. Cheerleaders express smiling
enthusiasm and the stereotypical used car
salesmen express the oily variety.

The Home Run Hitter’s Guide to Fundraising 93

 Your passion must seem to be an expression of
your real commitment to your company and to
the words you say. You don't have to wave your
arms and jump up and down, but if you are not
physically involved, others may question your
passion.

It requires tremendous energy for a VC to listen

to yet another pitch. It is your job to create that
energy with the expression of your passion.

– A passionate body leans slightly forward,

bent at the waist and leading with the heart.
– Arms and hands help to emphasize important
points, but are completely at rest when not
purposefully employed.
– When you really care about an idea, you work
hard to open your mouth in order to form your
words with energy.
– A passionate voice is easy for others to hear.
It is not the VC's job to work hard to hear you.
– Silence can often create a sense of
commitment better than any word or sound.

For many executives and for many reasons,

expressing what looks like real passion often
feels uncomfortable and theatrical. Church,
schools, and many work places conspire to make
us self-conscious and self-censuring. Especially
for young, highly intellectual, and academically
oriented business people, what feels like a wild
exaggeration of physical energy just begins to
look real, comfortable and committed. But you
cannot express all of your strength without also
expressing tremendous passion, and often what
feels comfortably committed seems restrained,
cautious and calculating. This is definitely one
area where the growing edge will be an
uncomfortable place to be for a while.

94 Chapter 7: The Swing: Delivery for Impact and Influence

 You risk more in seeming disinterested than in
seeming too interested. You are better off having
someone complain about your obvious passion
than your obvious boredom or exhaustion.

Connection
Part of what makes the Communication Delta
Model unique is that it explores empathy as a
tool for driving business results. Empathy is
making yourself available to other people and
responsive to their needs. When you choose to
empathize, you make yourself vulnerable and as
a result you are open to a deeper connection. All
of the choices – intellectual, strategic and
physical – in this process bring you to a stronger
connection to the people you are talking to. And
yet there are a few key choices you have to make
if you are really going to connect.

You won't connect by simply making eye contact.

Eye contact is a technique they teach in public
speaking 101. Some folks would have you
believe that looking at the clock on the back wall
or sweeping your eyes from one side of the room
to the other creates the illusion of connection.
The truth is speakers who practice making this
kind of "eye contact" either look like they can't
wait for their time to be up or like they are a
spectator at a tennis match. You are either
genuinely seeing people or not. No, you won't
make an effective connection by staring
unblinkingly at your VC, but an unwillingness to
see and be seen can seem shifty, fearful or
deferential. While the issue may be less dramatic
in a small room with one or two people, your
willingness to see and be seen may be the single
most important thing you can say about your
leadership.

The Home Run Hitter’s Guide to Fundraising 95

 – A connecting communicator finishes an
entire thought with someone before pausing
and moving on to someone else.
– A connecting communicator literally reaches
out with hands, arms, and torso to get with
the other people in a meeting.
– Everything about a connecting communicator
says "Are you getting this? What more do you
need?"
– A connecting communicator works to
understand the words, gestures, and posture
of the other people to deepen and maintain a
connection.
– Connecting communicators know that they
must be vulnerable to the reaction of the
people in their meetings or they leave
opportunity behind.

A connection is not something you do to the

people you are talking to; connecting is
something that happens to you. The real power
to influence as a communicator is in how
available and comfortably vulnerable you can
allow yourself to be. Remember, your audience's
reactions and responses to you and your ideas
determine your success.

Vulnerability is a fundamentally human

condition. Our skin is soft and mostly hairless, we
don't have sharp claws and teeth, and we
couldn't outrun or outfight a mountain lion,
literally, to save our lives. Ironically, the more we
create an impression that suggests we are
comfortable with that vulnerability, the less
vulnerable we seem. A solid, neutral stance –
relaxed, open, and vulnerable, sends the
message that "I am OK. I am comfortable making
myself a big target. I can take it and I don't need
to protect myself."

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 The leaders whose presence has changed
history most – Jesus, Buddha, Gandhi, etc. —
understood that their willingness to embrace
their human vulnerability vastly increased their
power and influence. The welcoming postures
that characterize photographs, paintings and
idealized characterizations suggest complete
transparency and vulnerability. They had impact
partly because they were vulnerable: completely
authentic, trustworthy, confident, and at peace.

Luckily, you don't have to be a deity or

completely enlightened to learn this lesson: The
less you seem defended, the less you seem to
need defending.

Your Voice
Of course, you can't just sit there, beatifically, in
silence and expect a VC to invest in your
company. If you are going to have maximum
impact, your voice has to be as compelling as the
rest of you. You can make five simple but
powerful choices that will make a huge difference
in your quest for impact.

1. Pause: The silences makes your ideas

seem more important and gives you time to
think. A rushed, rapid delivery will make you
seem less sure of yourself. Take your time
and let your audience think about what you
just said.

2. Inhale: You can't put the strength of your

convictions behind your words without
breath. In fact, without air in your lungs, you
can't create voice at all. Try it. Exhale all of
your air and try the preamble to the
constitution. See? Can't do it. A bite of air
gives you all the breath you need to say
most ideas. When you run out – you

The Home Run Hitter’s Guide to Fundraising 97

 guessed it – pause and inhale another bite
of air.

3. Project: This means you use the inhaled air

to "throw" your ideas to your listeners. Don't
just let the words fall out, use your whole
body to send your ideas with power to your
listeners. It helps if you let your torso come
forward while you speak and it looks more
convincing too. Don't confuse projection
with volume. You can amplify an under
projected voice and it still seems to lack
power. On the other hand, you can share
your voice powerfully without it being loud.
Projection works in small meetings as well
as formal presentations.

4. Use your mouth (articulation): When you

open your mouth and work hard with your
mouth to form your words, you look and
sound more committed and convincing. If
you don't open your mouth and use your
lips, tongue and jaw, you look held back and
bored. This takes some practice for lots of
people, but it makes a huge difference. Use
Jim Carrey as a model for this exercise.
Love him or hate him, he seems committed!

5. Make statements, not questions: Avoid

"up-speak," or ending your thoughts on an
upward note as if asking a question.
Nothing robs your voice of its strength like
up-speak. Practice ending your thoughts on
a downward note. Even a question sounds
more convincing when it ends on a
downward note. Try it: What time is it? or
What time is it?

98 Chapter 7: The Swing: Delivery for Impact and Influence

 The Power of Consciously or unconsciously, many people fear
Silence silence more than anything else during
communication. Getting comfortable with silence
is one of the most powerful tools you have, not
only for the impression you make, but also for
adding impact to your ideas. Often the person
using silence – purposeful pauses – with the
most skill and comfort seems to be the most
powerful person in the room. Comfort with
silence is also universally understood as a
critical skill and choice in important business
negotiation.

• Pausing gives you time to collect your thoughts.

When you pause regularly your ideas seem better
organized and more succinct. This is especially
important for tough "Q&A" situations.

• A pause gives your listeners time to digest your

ideas. Yes, we can hear more quickly than we can
talk, but hearing, understanding and impact are
different phenomena. Silence creates impact.

• A bit of silence before any idea makes it sound

more important because it sounds as if you have
given that idea some thought. That's one reason
why a quickly read speech will never have the
impact of someone really talking with passion.

• Pausing gives you time to exhale and release

tension so you feel more relaxed. Then inhale to
fuel a well projected voice. The faster you go, the
less you breathe, and the less you breathe, the
faster you go.

• A speaker who is comfortable with silence looks

and sounds confident and in control. It's as if the
willingness to pause, breathe and think says to
the people you are talking to, "I'm OK up here. I'm
not in a hurry and what I'm saying is so important
I want you to think about it."

The Home Run Hitter’s Guide to Fundraising 99

 • Consistent, purposeful pauses eliminate
distracting verbal fillers. When you break up your
thoughts with silences, those fillers go away. In a
counterintuitive way, pausing, even pausing
badly, helps your ideas seem better organized.

• Pauses punctuate. On the written page, commas,

periods, colons, etc., create meaning for the
reader. The people listening to you talk use
gestures, voice inflection and especially silence to
do the same for the spoken word.

Presence and Companies often send executives to me to help

Presentness: them develop leadership presence. When I ask
Connecting what that looks like, I usually get a list of
With Others, adjectives that probably looks pretty much like
Connecting the characteristics that help you to have impact
as a communicator (see "The Impression of
With Yourself
Greatness). I want to challenge your thinking
about your presence and in the meantime create
an opportunity for a deeper connection with both
your VC and yourself.

People sometimes describe media stars,

politicians, and royalty as having "presence" as if
some mystical aura surrounding them makes
them different from normal people. The truth is
that these folks are used to being in the spotlight
and either through training or the school of hard
knocks, they have found a way to keep their best
foot forward no matter what. Those with truly
astonishing presence find a way to make
everyone they contact feel uniquely important in
that instant. Bill Clinton, for example, was
famous for this ability.

The magical presence these people have is

nothing more than making habits out of the
choices we have been discussing. The ability to
carry yourself with a combination of real

100 Chapter 7: The Swing: Delivery for Impact and Influence

 authenticity in a world of phonies, with strength in
the face of harsh public scrutiny, with passion in
light of Herculean schedules and, most
importantly the consistent willingness to be
vulnerable and available for a real connection, is
attractive whether you are a movie star or an
entrepreneur. It is also wildly differentiating. It
defines star power and a specific kind of
presence.

You can develop it, but it requires commitment,

patience, and hard work.

The ultimate presence, however, is rarer, harder

to come by and much more important for
business leaders. This presence connects you
not only with others but also deeply and
profoundly with the truth of who you really are. I
call it Presentness and while it is hard to define
in a few words it means that wherever you are,
whatever you are doing, you are completely
there and completely doing that thing.

As an entrepreneur growing a business, it is

almost impossible not to get caught up in a
thousand things at the same time. When you do,
you are living at least as much in the past and the
future as you are in the present moment. As a
practical matter, you will not respond as
effectively to a VC's questions if you are thinking
about next month's payroll or last month’s
missed deadlines. In business, as in life, the only
reality is the present. This doesn't mean you
can't plan. It means that when you plan, you plan
with all of your heart, mind and soul right then
and there.

Keep asking yourself, "What is the

opportunity/challenge right now? What can I do
right now?" and then do it, now. The past is at

The Home Run Hitter’s Guide to Fundraising 101

 best, an inaccurate memory. The future is at best
only a maybe. Living in those times wastes your
now and makes you crazy.

Now is all you have.

Those few who live in the now make things

happen. They look and sound like the people you
want to be with. They attract, and they have
extraordinary presence, because they are
extraordinarily present.

102 Chapter 7: The Swing: Delivery for Impact and Influence

 C h a p t e r

8 Pre-Game Jitters:
Managing Flight or
Flight

The model is complete. Now all you have to do is

go out there and execute. Of course it is easier
said than done – especially if the idea of meeting
with VCs or presenting in a big room full of
people is the scariest thing you can think of.

For some of you, the greatest challenge in

raising capital is neither planning, nor delivery. It
is intestinal fortitude. Some folks would argue
that this section should come first in this process,
not last. It is here because if you are ready
strategically and you have a physical plan of
attack, most of you simply won't be as
apprehensive. A good plan is better than
Pepto-Bismol, especially if you are new to the
process of meeting with and talking to the
venture community. That said, the better you
understand your response to the situations you
are about to face, and the more you prepare, the
less impact the butterflies in your stomach will
have on your ability to get your capital.

Jerry Seinfeld once said that since public

speaking is America's number one fear “If invited
to a funeral, most Americans would rather be in
the coffin than standing at the pulpit delivering
the eulogy.” No magic formula can ease your

The Home Run Hitter’s Guide to Fundraising 103

 nerves, but you can make some powerful
choices that will help you feel more comfortable
and in control.

Recognize it. Your body is going to respond, so learn your own

response pattern and make friends with it. "Heart
rate up? Right on time. Sweaty palms? Check.
Now here comes the cotton mouth." You do not
have to encourage it, but if you do not know your
own pattern, you will be surprised, and that will
definitely make the cycle worse.

Reality check. Most of us (especially in business) are so

concerned about winning and being perfect, we
forget why we are communicating in the first
place. Developing and deepening a relationship
based on mutual value is what you are there for.
Closing the deal, winning the contract, getting
your capital, can happen only if the people in
your meeting engage with the ideas you share.
The people on the other side of the table are not
the enemy.

Stop and No, you do not have to repeat a mantra, but when
exhale. you stop talking and exhale all the air in your
lungs you are literally telling your central nervous
system that you are not under attack. You do it
instinctively when you walk in your front door at
the end of a long hard week and say Ahhhhhh.
Remember, the silence that feels like an eternity
to you, looks and sounds like control and
confidence to the others in the room. The pause
gives you and other people time to think – you
about what you are going to say, everyone else
about what you've just said and what you might
say next.

104 Chapter 8: Pre-Game Jitters: Managing Flight or Flight

 Put the Fight or flight isn't there to make you feel
adrenaline to nauseated. Fight or flight is meant to help you in
work. challenging or threatening situations. If you do
not use your natural physical response for what
it is intended, it will make you feel crazy, and
probably make you look uncomfortable. How do
you use it? Open up! Get your body involved!
Project your voice! Let your passion come
through! Remember, the more adrenaline you
use, the less there is swirling around in your body
making you feel nervous. Expressing your
passion makes you look more interesting and
interested in your ideas. That is what the physical
response is for.

Knowing is great, but doing is what makes

change. You will not feel more comfortable in
your next critical communication unless you
practice and make these choices into habits.

Just before the I do not recommend that you mentally rehearse

meeting. content – especially just before a meeting. You
should only practice your content in real time, out
loud. Practicing content in your head only
reinforces too rapid a pace and an overemphasis
on getting each word just right. The VC has no
idea which words you have chosen to share or in
what order. Your meeting need not, should not,
and will not be word-for-word as you have
practiced it. If it is, you have left out the people
you came to meet. The best meetings develop
and deepen professional relationships. You do
not get credit for having said exactly what you
had planned to say.

The Home Run Hitter’s Guide to Fundraising 105

 Do, however, visualize the physical choices you
are working on making into habits. The power of
the relationship between these choices, your
comfort, and your ability to think on your feet
cannot be overemphasized. If you focus on the
words and forget one in the meeting, everything
will swell into the flight or fight vortex. Focus on
your body and the thoughts will come.

106 Chapter 8: Pre-Game Jitters: Managing Flight or Flight

 C h a p t e r

9 Your Turn at Bat:

Swing for the Fence

If you have worked through this process, you are

better prepared than 90% of the entrepreneurs
talking to the same VC on any particular day. I
hope this process helps you get what you need
to grow your business.

Bucking the current industry standards by using

the Communication Delta Model is a powerful
source of differentiation and even a competitive
advantage. There is risk, however, in not
following the herd. You run the risk of standing
out, the risk of seeming original, of being your
own person. And, as you communicate with
empathy and purpose, you run the very real risk
of developing and deepening important
relationships. Some of those relationships will
help your business succeed; some will merely
help you live a fuller life.

Take the risk to communicate strategically, not

habitually. Let the best of who you can be and
the value of your company differentiate you from
the dozens of rote PowerPoint presentations that
investor will see that day. Stay in the moment,
work to connect, and let the power of the "The
Home Run Hitter's Guide to Fundraising" and the
Communication Delta Model help you take the

The Home Run Hitter’s Guide to Fundraising 107

 next big step in allowing your leadership to make
your company the huge success you know it can
be.

I wish you good fortune and much success!

108 Chapter 9: Your Turn at Bat: Swing for the Fence

 A u t h o r

About the Author

Dan Sapp has over 15 years experience

consulting and coaching with performance driven
individuals and teams. In 1997 Sapp founded
Dan Sapp & Associates (DSA) and gained a
reputation for his ability to help executives brand
their leadership through their impact as
communicators. DSA has helped countless early
stage and mature companies raise capital
through both the private and public markets. Dan
has lectured at UC Berkeley's Haas Business
School's executive education program, at Duke's
Fuqua School of Business and currently consults
with the Dean and the development team at
Stanford's Graduate School of Business. Sapp's
clients have included senior executives, partners
and leadership teams from Silicon Valley Bank,
Nokia, Hellman & Friedman LLC, 3i, Ernst &
Young, Pillsbury Winthrop Shaw Pitman, Mellon
Capital Management, Skyy Spirits and many
others.

The Home Run Hitter’s Guide to Fundraising 109

 Following completion of his graduate studies in
clinical psychology, Dan started his
management-consulting career with a small
organizational development firm based in
London.

Before launching his consulting career, with an

undergraduate degree in Psychology from UNC
at Chapel Hill and his experience as a prep and
collegiate athlete, Sapp became a pioneering
fitness and conditioning coach. His clients
included not only corporate executives, but also
competitive age group athletes as well as
Olympic gold medalist Bryan Boitano.

He lives with his wife and two sons, their 85lb

rescue dog Guinevere and Matilda the cat in Mill
Valley, CA.

110 Author
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Having an MBA or PhD is great, however, putting
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Books give you a platform to stand on. They help

you to:

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Books deliver increased revenue, particularly

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Books are better than a business card. They are:

• More powerful than white papers

• An item that makes it to the book shelf vs. the
circular file
• The best tschocke you can give at a
conference

The Home Run Hitter’s Guide to Fundraising 111

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112 Your Book

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The Home Run Hitter’s Guide to Fundraising 113