Philanthropic Fundraising from Investor Types

Philanthropic Fundraising from Investor Types

By Tom Wilson Major Gifts Guru

Having worked on the West Coast of the United States for more than 20 years now, I’ve had the opportunity to work with many venture capital investors, angel investors, and mid-cap investors. In presenting a major gifts proposition to them there are unique challenges.

What I’ve found that works well is:

  • 12 to 20 slide PowerPoint outline presentation with pictures, charts, graphs to be able to engage the potential investor (major gift donor) in our organization, its impact, its challenges, and its return on investment for society.
  • An everything you might want to know set of documents that enable a serious investor “to go deep.” Structural proposals to your toughest area foundation work well as a basis for this document.
  • A comprehensive internal team of both management and all employees and staff so when the investor does their due diligence by wandering around (either on person or on the phone) they are getting a consistent, unified response from all parties within your organization no matter what the job level.
  • Be respectful but be ready to push back if unreasonable questions are asked. This means you have to have done your homework. A strong institutional and project plan are critical to knowing what you know and what you don’t know. It’s okay to say “we haven’t thought about that yet.” Or, “I don’t know, that’s a great question.” Sometimes these investors want to see how tough you are.
A recent article in The New York Times “In Pitching to Angel Investors, Preparation Outweighs Zeal” by Brent Bowers brought back some of these concepts. Mr. Bowers noted:

“Don’t get carried away when you pitch your product as your investors may lose interest.”

“One misstep – like stammering a vague reply instead of saying you do not know the answer, can also kill the deal.”

There are an estimated 260,500 active angel investors in the United States according to Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire. In 2008 $19 billion was invested in 55,000 ventures; in 2007 $26 billion. Mr. Sohl noted:

“With time at a premium, it is imperative for entrepreneurs to come to both meetings (an informal session to see if an idea has promise and then a PowerPoint presentation followed by a Q&A) with solid arguments.”

At a Babson College conference Richard Sudek, an angel investor and assistant professor of entrepreneurship at Chapman University in Orange, California stated: “We like you to show excitement but don’t force it. Being authentic is much more important. There is such a thing as quiet passion. Anything that comes across as slickness is a negative. Angels put a high value on trustworthiness. If you don’t know the answer to a question, say so, and promise to get back to them. Don’t fake it. In fact, acknowledging gaps in your knowledge and other weakness, and letting angels know you need their help, can add to your credibility.”

Advice from three research studies presented at the Babson College entrepreneurship conference include.
  • Memorize an “elevator pitch” of 90 seconds or less
  • Consider hiring a speech coach
  • Attend pitching contests
  • Be upbeat but realistic in your revenue projections showing optimistic, middle-ground, and pessimistic projections
  • Don’t ask people for money unless you have invested your own
  • The business plan should be precise (look at the software on Angelsoft.net)
  • If you get a “no,” ask for suggestions on where else to make a presentation, get referrals of other investors to see
I love these articles that have nothing to do with major gift fundraising . . . and everything to do with it.

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1 comments:

Tony Macklin said...

Thanks for the thoughtful post and for the reminder on the power of quiet passion.

What did you mean by "Structural proposals to your toughest area foundation work well as a basis for this document."?