It only takes one yes.
The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way to pitch a startup idea to investors?” is written by Gene Wang, cofounder and CEO of People Power.
I’ve raised several hundred million dollars as CEO for my four tech startups and have learned many lessons along the way. Cash is the lifeblood of a startup, but raising money is always difficult and time consuming. There is both art and science involved in doing so successfully. Here are eight important lessons to consider:
Target the right investors
Before meeting with investors, quickly learn all you can about them. What stage do they invest in (seed, Series A, Series B, etc.)? Don’t waste your time talking to growth-stage investors if you are early stage. Do they lead or only follow? Concentrate on only meeting with people who lead. Do they specialize in your vertical? If not, educating them might take too long. What are their portfolio companies and have they invested in a competitor? I once met with a VC who had invested in a competitor in the process of bankruptcy, and the meeting was a huge waste of time. I made the mistake of not checking the VC’s website of portfolio investments in advance. We awkwardly aborted the meeting within the first 15 minutes, as he was living through the painful experience of funding a startup that was flaming out, and I didn’t want to share too much information about my own company. (I later looked into buying the assets, but that didn’t work out either.)
See also: The Best Way to Impress Smart Investors
Target active investors who lead investments in your stage, who want to invest in your space but haven’t, and who have a great reputation among their portfolio.
Start early and organize your outreach
You should be actively pursuing funds six to nine months before you need funding. Personal referrals and introductions are the best ways to get in to see a VC. Enter names, contact information, stage, sector, referral source, date, and actions from every meeting into a spreadsheet or CRM. It will be important to remember who you met with and when.
Prepare different stories
You should practice a one-minute version, a 10-minute version, and an hour-long version of your investor pitch. You should have a technology pitch, as well as a business-focused pitch so potential investors know you understand how your business will survive against competition. Your pitch should be as dynamic as your startup itself, as it will have to accommodate constant learning.
Refine your answers to tough questions
Come up with every tough question you can think of that a VC might ask, and prepare compelling answers. Every time you do a pitch, write down any new question you’re asked, and prepare an answer to it for the next pitch.
Since a VC says no 99 times out of 100, you need to run a disciplined and scientific sales process in order to get a yes. Be in that 1% by identifying investors most likely to invest, be organized and reach them through a reference, and practice pitches of different lengths with compelling answers to tough questions. However, that’s just half of the story. Winning investors is like getting married. You must fall in love.
You have to make investors believe in the huge opportunity that your company addresses, and help them understand how exciting the journey will be to that big pot of gold at the end of the rainbow. Everyone shows financial projections that shoot upward to the right, but nine out of 10 startups fail. You must appeal to the investors’ emotions to get them to believe that your company will be one of the few that creates great shareholder value.
Show your passion
Most importantly, you need to convince investors to believe in you. Investors are first and foremost investing in people, even more than in markets or products. Failing to show your passion in the first 30 seconds can cost you a deal.
Give a killer demo
If at all possible, show an awesome demo. I still vividly remember a three-person meeting in 1991 with a young Steve Jobs, then CEO of Next Computer. While I sat riveted to my seat, my jaw hanging open in disbelief, Steve and his VP of engineering demoed the revolutionary NextStep hardware and software to me. Although the system was buggy and incomplete, Steve’s reality distortion field was so strong, that I became convinced that we should port Borland C++ to the NextStep. (Fortunately, my boss later nixed the idea.) Great demos are like great theatre. They leave a lasting impact.
Never give up
True artists are committed to their life’s work. Believe in yourself, your team, and your vision. Learn to take 100 no’s. It only takes one yes, and you are on your way. Great things happen to startups that stay in business.
Gene Wang is currently the CEO and cofounder of People Power. He was previously chairman and CEO of Bitfone, an industry leader in mobile phone device management—which sold to HP in 2007 for $160 million—and CEO and chairman of Photo Access, which sold to Agilent in 2000. Gene was CEO of Computer Motion, a leader in medical robotics, which he led through a successful IPO in 1997.