In the past 4-5 years, I’ve come across a lot of food entrepreneurs who have ideas for new products, platforms or services. Many are smart and motivated individuals, entrepreneurs who are passionate about what they want to do and have the vision to make it happen. Too often though, these same entrepreneurs are hamstrung by the process of raising money from investors. This is especially the case as the world of food innovation continues to evolve and many institutional investors are not ready to jump into the food investing pool headfirst. With this trend comes a remarkable increase in the amount of atypical investing from strategic partners, angel investors, and high net worth individuals who see a robust future for food entrepreneurship.
But, with this modified landscape comes a need to rethink how entrepreneurs pitch themselves and get investment. It isn’t about business as usual, and more often in the food space, it’s about relationships and people more than it is about the product or service being pitched. With that in mind, below is a check-list of ten things to keep in mind when pitching your next food endeavor.
1. Figure out where to find investors.
When participating at conferences and on panels, one of the most frequent questions that comes up is where to find investors. In the food space, this is especially difficult because of the nature of food investing. But, there are still resources out there that entrepreneurs can put to use to help themselves get funded.
First and foremost, entrepreneurs that are new to the startup world should find relevant resources to educate themselves about the investment landscape. VentureBeat offers a great set of content around fundraising that can help new entrepreneurs chart a better plan for raising money for their company. Food + Tech Connect is also a useful website for finding out about all that’s happening in the world of food innovation. The site offers a monthly M&A newsletter, which quickly summarizes who is raising money, who is investing and where startups can find funds.
Also, entrepreneurs should engage in active research to find out where other similar food startups are finding their funding. Both Crunchbase and Angel List offer resources for entrepreneurs that want to discover and connect with investors who are active in the food vertical. It requires a bit of due diligence on the part of the entrepreneur, but it’s well worth it to find potential investment.
2. Vet Your Deck.
Before approaching any investor, entrepreneurs should evaluate their startup concept with a trusted network. This network should give honest and critical feedback, ideally with experience in the food space or with evaluating startup potential. Entrepreneurs should have a good grasp of the story they are trying to tell investors before actually pitching those investors.
3. Establish a clear purpose for meeting with investors.
Often, the initial meeting will obviously be about raising money, but many times it’s not. When setting up a meeting with investors, entrepreneurs should be clear about what the goals of the meeting are in advance. If it’s to solicit critical feedback, say so. If it’s to build a relationship with an investor for later, make sure to establish that before the meeting. The general expectation in meetings with entrepreneurs is that there will be some ask to raise investment, and investors will be very clear about their intention by the end of the meeting. But, if an entrepreneur’s intention is something other than investment, making that clear before the meeting will put investors in a position to provide feedback and hold their decision about investing until the company is actually ready for such investment.
4. Start talking with investors before you need money.
Related to the above, entrepreneurs should use every initial meeting with investors as a way to build a relationship, rather than seek funding. It’s rare that I’ve seen an investor in the food space green-light an investment after the first meeting. Rather, these are opportunities to get to know potential investors, build a lasting relationship and set the stage for the formal pitch in the weeks and months to come. It also gives an entrepreneur the chance to field critical feedback without risking potential investment capital.
5. Don’t be afraid to talk about your idea.
I’ve come across many entrepreneurs who keep their startup idea under lock and key, revealing it only to those under NDAs and in private meetings where ideas can’t be shared openly with the food community. While it’s a pervasive notion in the startup world that if you share your idea it’s bound to get stolen by someone else, I’ve heard a great saying that helps to dispel this commonly held myth: startups don’t starve, they drown.
There is no shortage of ideas for smart entrepreneurs, and they rarely need to steal ideas from each other in order to find something new to work on. The only person being hurt by keeping an entrepreneur’s business idea in the dark is that entrepreneur. They miss out on critical networking opportunities at events, they lose the ability to talk openly and solicit feedback, and they put themselves in a position to hold up conversations with key partners and investors while they wait to bring a minimum viable product to market or to get an NDA signed.
6. Send all materials well in advance.
The best preparation is early preparation. Especially if it’s a meeting around investment, entrepreneurs should send any materials for review well in advance, which is at least a week beforehand and possibly more. Sending materials the day of the meeting or the night before puts an entrepreneur in a position to focus on the granular rather than the big picture, to sell process rather than vision, and ultimately doesn’t give investors reasonable time to form critical thoughts and feedback that can both inform an investment decision, and also raise issues or ideas around strategic business development.
7. Don’t use the meeting to walk through the deck, use it to sell the vision and story.
Building off of the above (and while I feel that decks are important) I’ve sat through many a meeting where entrepreneurs use their deck as a crutch to get them across the finish line. Decks, by their nature, are two-dimensional. Boring. They substitute substance for overviews, often reducing the core content to a few bullet points.
Rather than sell based on a well-designed powerpoint presentation, entrepreneurs have to sell their vision and their expertise. Both are multi-layered, complex and have a lot of appeal if an entrepreneur knows how to craft a compelling story. More and more, investors are being pitched on a variety of food products and services, and too often, meetings devolve into step-by-step walkthroughs of page after page of slide presentations. Entrepreneurs need to remember that they must excite and inspire at every step of the entrepreneurship process.
Similarly, remember to focus on vision, not process. As an investor, I care about how it works, but I won’t invest based solely on that. And, quite often, entrepreneurs spend so much time focusing on how their food product works, but not why it’s important. Sell on vision first, and let investors ask questions that will reveal process.
8. Research before the meeting so you know who you are meeting with.
This may seem rather obvious, but the food space is so diverse that it is critical that entrepreneurs have up-to-date background information on investors they are meeting with. And not just the investment companies as a whole, but the individuals as well. Find out what they have invested in previously, what their investment track record is, and what part of the industry they come from. While it may seem obvious, there are many entrepreneurs (and investors) who come to meetings clearly unprepared to delve any deeper than the most superficial level (“who are you and what do you do.”).
For instance, if an entrepreneur is meeting with an investor who experience in food distribution, that entrepreneur doesn’t need to waste time talking about the current problems with the food distribution system (or perhaps doesn’t need to talk about them so explicitly). By knowing the audience for a particular presentation, an entrepreneur not only shows that they have taken the time to figure that information out, but also put themselves in a better position to extract the most value from the meeting.
9. Know your competition and know what you do differently.
This is more granular than anything else, but entrepreneurs should know where they fit in the marketplace. They need to have a clear idea of who they serve, what they do, and what they do differently from others that are currently out there. Entrepreneurs need to discover competitors, figure out what works for them, and decide what it is that will be strategic about their startup, and in that, what will be different. Being able to talk knowledgeable about the wider food landscape, and how a company fits into that landscape is a huge selling point for the expertise of an entrepreneur.
10. Above all, don’t forget that it’s a relationship business.
While investors put money into companies, they invest in entrepreneurs. I’ve talked with many entrepreneurs and many investors, and while the money is important, it’s the people that make things happen. More than half, and potentially much more, of investment decisions tend to be based on the people and relationships, rather than the idea. A good idea executed by a poorly composed team will rarely work out, but a mediocre idea executed by a top-tier team will almost always find a way to success.
Entrepreneurs need to be certain they are forming relationships with investors they feel they can work with. They should be wary of jumping quickly into investment deals, and make sure the investors are a fit with the overall mission of the company. While it doesn’t seem like it on the face of it, the investors are just as much a part of the team as anyone else. An investor that wouldn’t be hired as an employee shouldn’t be brought on as a partner.
And, to that same point, entrepreneurs need to be sure they are composing a strong team and have a positive team dynamic. This relates to both how the team interacts on a personal level, as well as the professional experience they bring to the table. This includes professional food experience, technical expertise, and more. Entrepreneurs need to figure out what talent they need to fill for startup success and try to find cofounders or early employees who can fill those areas.
Adam Salomone is Associate Publisher of The Harvard Common Press, a Boston-based, independent publisher of primarily cookbooks. He's spent the last five years exploring the world of digital and how it relates to our current understanding of print media, especially in the food world.