Getting Investors To Understand Your Biz Model with Prevu Cofounder Chase Marsh
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The following is written by this week’s podcast guest, Prevu Cofounder Chase Marsh
How to Attract Investors: Pitching Your Unique Business Model
My name is Chase Marsh, and I’m co-founder and co-CEO of Prevu, a Corigin Ventures-backed real-estate technology startup that is disrupting the antiquated homebuying process for the better. Prevu is a digital home-buying platform where buyers can browse online listings, schedule tours, make offers, and save up to 2% of the purchase price after closing — all from one site.
We recently completed our seed round of funding, which, in addition to Corigin, included investments from Kairos and AVG Basecamp Fund, and have learned a lot from the process. Fundraising isn’t easy by any means, so I thought it might be helpful for me to share with you some of the lessons we learned to help you increase your chances of success.
Find your value proposition
Thousands of new startups are cropping up each year, and they’re all competing for investors’ time. You need to be able to quickly articulate who you are, what you do, and how you are different. Preferably in the first 60 seconds.
What is your hook? What value are you providing that others aren’t? If you can’t identify that immediately, you will likely have a very tough time securing investors.
Many VCs mentally bucket companies into categories and think, “Oh no, not another [fill in the blank] company.” In our early days of fundraising, when my co-founder, Thomas Kutzman, and I weren’t as clear in communicating our value proposition, we likely ended up in one of those buckets. We’ve since learned to lead with what sets us apart from other tech-enabled brokerages, which is our ability to be a friend in the early mile and expert in the last mile.
One analogy that comes to mind is the job application process. If your resume is in a stack of 20-50 others, it’ll get lost in the shuffle without an attention-grabbing differentiator. Which nuggets will get people’s attention? Is it your idea, your pitch, the narrative, the numbers, or the TAM (Total Addressable Market)? Figure it out before approaching investors.
Anticipate skepticism and have a response in mind
There will always be investors questioning your business model. But when they don’t provide specific feedback, it’s difficult to respond in a way that allays their fears. Don’t be shy about digging in to find out what’s giving them pause.
To solicit feedback in a non-confrontational way, turn the conversation around by asking open-ended questions like, “How would you think about this problem if you were us?” or “What companies do you like in the space and why?” See what information you can pull from these discussions.
If there is a major objection that keeps coming up in meetings, you need to get in front of that concern proactively. By coming to a meeting prepared with helpful answers, you increase the likelihood of getting a second meeting.
Find the right investors
At Prevu, we’re big believers in creating frameworks and plans. As a digital home buying platform and tech-enabled brokerage, it’s a must for us. A friend of mine (who also happens to be a VC) advised us early on that, “there are a lot of people who know tech and there are a lot of people who know real estate, but there aren’t a lot of people who know both.” With this in mind, we actively targeted the investors who were in this sweet spot.
We were looking for investors who knew enough about our vertical to be able to appreciate the differences in our business. While it seems super intuitive, trying to create a framework of what your “ideal” investor looks like and then doing the homework to build that list is very important. Doing this will increase your odds of success, even if it does take some time to get right.
Continue to iterate your fundraising strategy
Use your data wisely. If you’ve sent 15 investor emails and gotten 0 responses, take that as a cue to revise your pitch and make sure it’s clear what differentiates your company.
Think about it like an advertisement: If you were running a Facebook ad and no one was clicking on it, you would probably change the ad. The same applies to investor outreach. If your current tactics aren’t working, change them. A/B testing can help you see which wording and data-points resonate best with potential investors.
Historically, we sent out a bunch of different emails to investors and most were not successful. By analyzing the results and reworking our messaging, we were able to dramatically increase response rates.
Ultimately, you’re marketing your business, and the best marketers use experimentation to find results. Keep adjusting your strategy until you find a process that works.
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