This Entrepreneur Raised $750 Million To Transform The Way Organizations Use Energy

Alejandro Cremades Founder at acremades@gmail.com

2021-06-24

Erik Schiemann has raised hundreds of millions of dollars in financing to scale commercial solar across the US. 

During our interview on the DealMakers Show Schiemann shared his passion for exploring what else is out there, developing the mindset of comfort in the chaos, the principle of learning to clean your own weapon first, and what’s happening in the renewable energy space. Plus, how to create and pull off a spin-off.

Listen to the full podcast episode and review the transcript here.

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Challenging Yourself To Go Out On Your Own

Erik Schiemann was born in a small town in Minnesota. 

It was a great environment. He was fortunate to have those parents which instilled in him that he was capable of anything he wanted to do, and to go out and do it.

For Erik that meant aspiring to get out and explore what else existed beyond the borders of his small town. To go out on his own, without his support network. 

Also being patriotic he obtained a four-year scholarship in the Army ROTC. That made him a commissioned officer in the United States Army. 

He attended Michigan State, where he initially thought he wanted to become a lawyer. However, his senior ROTC officers who would evaluate his summer training believed he would be a great infantry officer instead. They shipped him off to Korea.

Becoming Comfortable In The Chaos

The Army landed Erik in the DMZ between South and North Korea in a tense time between the two countries. 

He was there living with his infantry soldiers. He grew mentally, physically, emotionally, and as a leader. He went on to serve in Afghanistan and Iraq as well. 

In these environments, you learn to lead. You learn to assess and navigate risks, how to act in the face of uncertainty and risks, take your team there, and be willing to learn and adapt in the field. 

Schiemann says it “shaped my ability to now be comfortable making the big decisions with minimal data in taking that leap.”

Once you’ve come from operating on limited data in life and death situations like that, any decisions you have to make in your professional career, and in starting and growing a business, are far less intimidating. They aren’t going to kill you. 

Having that comfort in the chaos of running and leading a business can make it all come much easier. It can be a great asset in decision-making and moving fast. 

In fact, this is so important and pivotal that Erik’s top piece of business advice before starting a business is to have that confidence among the uncertainty. 

He says, “Hang in there. It will all work out. Just because you have a plan doesn’t mean it’s the plan that’s actually going to be the way it goes.” Yet, he says “It’s going to be okay.” Looking back you’ll be able to see how things worked out, despite your anxiety and doubt in the moment. Believe in the long game.

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Learn To Clean Your Own Weapon First

To lead in the military you first have to learn to dig your own foxholes and clean your own gun first, before you can train and lead others to do it.

Erik has applied this to both building his own team, as well as equipping himself for the mission.

On returning home from the military, Schiemann decided to arm himself with more tools for going into business by going to business school to get his MBA. 

His summer internship ended up being at Lehman Brothers in 2008. Every week the higher-ups would tell the team to ignore the news, and that everything was fine, and they were strong. Of course, we all know what really happened. 

It was a huge learning experience from finance to M&A to how to interact with your staff, and not.

He ended up going into investment banking with Barclays, and then to work with GE. In addition to learning to sail with his father, he had been teaching himself about solar at a local community college.

It gave him an overview of the technical aspects of solar, how the financing worked, and the lingo, so that he could converse credibly with others in the industry.

GE was analyzing the renewables business. Solar, and especially the existing model, wasn’t really for GE at the time. Though Erik personally decided to dive into it. 

After much exploration, he decided the opening was in the commercial and industrial space, and that it should be national. 

His first step was to start walking into businesses to try and pitch them solar and learn about their thought process. He had nothing. No business, no product, nothing. Some threw him out. Then he landed a sale. 

He had to go back to GE and then decide how to build a business around it. It just kept snowballing. They were building market share. 

Spin Out of GE Solar

There was a potential conflict for GE with its other customers. So, Erik pitched the CEO, with the choice of GE having to go all-in on this, to just let it die, or alternatively back it as a separate venture and take 10-15%, without any of the hassles.

So, they let him spin out the company and rebrand as Distributed Solar Development. BlackRock came in as a backer. BlackRock ended up buying out GE’s share shortly after that. 

He says that “The vision of Distributed Solar Development is one where every major parking lot in the United States, that has no other use besides parking cars, has its blacktop covered with solar, is connected to storage, and that electricity is going into buildings that no longer need to buy coal power or no longer need to buy natural gas.” They are already making great strides towards making that a reality. 

They are already making great strides towards making that a reality. So far the company has raised over $750 million from top-tier investors like Credit Suisse, Morgan Stanley, Fifth Third Bank, and Silicon Valley Bank.

Storytelling is everything which is something that Erik Schiemann was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Listen in to the full podcast episode to find out more, including:

  • How Distributed Solar works
  • The benefits of solar for businesses
  • Financing your business

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Erik Schiemann On Raising $750 Million To Transform The Way Organizations Use Energy

Alejandro Cremades Founder at acremades@gmail.com

2021-06-24

Erik Schiemann has raised hundreds of millions of dollars in financing to scale commercial solar across the US via his startup Distributed Solar Development. This company has acquired investment from top-tier investors like Credit Suisse, Morgan Stanley, Fifth Third Bank, and Silicon Valley Bank.

In this episode, you will learn:

  • How Distributed Solar works
  • The benefits of solar for businesses
  • Financing your business

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

*FREE DOWNLOAD*

The Ultimate Guide To Pitch Decks

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Erik Schiemann:

Erik Schiemann created the business idea to start DSD while serving as a finance manager for GE Renewable Energy.  Since that humble beginning from within GE, Erik has led every stage of growth for what is now Distributed Solar Development (DSD).  Erik successfully incubated DSD within GE as “GE Solar”, consistently building the business despite an internal struggle within GE to adequately support and capitalize the business at highest levels of the company.  In 2019 Erik determined the market was ready for an independent, national distributed energy platform. He successfully executed the simultaneous spin-off and the first equity raise to launch DSD as an independent organization.

In his role as CEO, Erik Schiemann overseas all aspects of DSD and focuses his efforts on successfully scaling a national renewable energy developer and solutions provider.  Erik manages his time between day to day operations and longer-term value creation.

Prior to founding DSD, Erik Schiemann served as an Investment Banker focused on M&A and capital raising with various Wall Street institutions.  He also served as a US Army Ranger Infantry Officer from 2000-2007 with extensive wartime service overseas.

Erik Schiemann holds a B.S. in Political Economics from Michigan State University and an MBA from the University of North Carolina at Chapel Hill.  Erik Schiemann, his wife, and three children live in Saratoga Springs, NY and enjoy spending weekends outside.

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Connect with Erik Schiemann:

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have an interesting founder, and I think it’s going to be mind-blowing, his story and his journey and what he’s up to today with his company. But without further ado, let’s welcome our guest today. Erik Schiemann, welcome to the show.

Erik Schiemann: Thanks for having me.

Alejandro: Tell us about your upbringing because you were born in Minnesota in a small town, but quite early on, you knew it was time to spread your wings and fly somewhere else. So tell us about growing up there and what caused you to have in mind, “One day, I’m going to be out of it.”

Erik Schiemann: I grew up in a great small town in Minnesota, a great childhood, good experiences. I was always challenged by my parents to say, “I can do whatever I want to do; go do it.” I always had aspirations to see more that’s out there. I got through my high school years and thought I wanted to see what the bigger world was, and I wanted to do it on my own, and I had an interesting quest to serve my country. I applied and got a four-year scholarship to become an Army ROTC and became a commissioned officer in the United States Army. I could go anywhere I wanted, and I did a bunch of visits. I really liked the feel of Michigan State, so I left my town and went to Michigan State. It wasn’t because I hated my small town; it was just more that I wanted to see what else was out there, and it was a good start to what has become an interesting journey so far.

Alejandro: There’s this phrase that you don’t know what you don’t know, so how did you know that there was something that you didn’t know that was outside of Minnesota?

Erik Schiemann: I had a gut instinct. I kept up on things. I saw what’s on TV. You see what’s going on in politics or music or anything like that. I looked around. In a small town, you’re very sheltered, and it feels good, and it’s safe, and it’s a great place to grow up. I felt like: would I be ready? Could I do it at a different location where I’m on my own, where there isn’t a support network? I wouldn’t say there’s any particular thing that said, “Now it’s time to go do that.” Maybe it was just an inner drive to challenge myself to say, “Go do what you’re doing. Be successful, but do it in a huge school or another state away from your support network. It was just always a piece of who I was.

Alejandro: When you were at Michigan State University, you thought that your plans were around becoming a lawyer, but it seems that senior officers had different plans for you, so what was that?

Erik Schiemann: I went there thinking that I wanted to be a lawyer. Between my junior and senior years in Army ROTC, I had a very normal college experience. I happened to be in ROTC. In the summers, they ship you off to different training events. That summer between my junior and senior years, I went to a training event out in Washington State. While there, the senior military officers who were evaluating me thought that I would make a very good infantry officer instead of a lawyer, so in order to show me that they saw in me that I hadn’t seen in myself yet, they shipped me out after my training to Korea. This was 1998 or 1999 when there was tension among the North and South Koreans. They put me in the Demilitarized Zone with an infantry unit where I was there living with the soldiers, running an infantry unit, and it really did unlock within myself that if I was going to do anything in the military and serve my country, while there’s nothing against doing it as a lawyer, it just wasn’t going to be a good fit for me. I wanted to challenge myself physically, mentally, emotionally, and in all the leadership qualities I wanted to build. Being an infantry officer was going to be the right answer for me, so I decided to switch my focus in my senior year, and that was what I was lucky enough to become.

Alejandro: That gave you the opportunity of serving in Iraq and serving in Afghanistan, very dangerous places and very dangerous times and, obviously, very uncertain times. I’m sure that for you, as well, as a leader, that has shaped those leadership skills to a whole other degree, and perhaps also being at ease with uncertainty because uncertainty is real when you’re building and scaling a company. How would you serve in places like Iraq or Afghanistan, where death is right there with you? You’re always with death. How do you think that experienced the leadership for you?

Erik Schiemann: It’s a good question. I think when you go overseas, and you deploy, you have first and foremost the responsibility of the people that serve under you, and that’s got to be the most important thing that you care about. It doesn’t mean that your job is not to put their lives at risk because, unfortunately, sometimes it is exactly your job to put both yourself and others’ lives at risk. It’s to do it in ways that eliminate the obvious risk so you can only react to the things that you don’t see, to that uncertainty that you mentioned. Being in those environments, what they did for me is they made every decision in my life after coming out of those environments a little bit easier to analyze and reflect on, and make decisions on, even with that data, even with uncertainty because the consequence of every decision after those deployments, in the business world, isn’t as dire and as serious as the consequence of making bad decisions on the battlefield, and those being loss of life, loss of civilians, whatever may happen. I took that experience of the military and those deployments overseas, and it shaped my ability to now be comfortable making the big decisions with minimal data in taking that leap. Basically, because at such an early point in your professional career, when you have to make decisions that have such dire consequences, the perspective you get after that is like, “It will never be as bad as this, so let’s try this. I know 15% of what I need to know, but I’m comfortable with that. If this next variable pivots, and I have to adjust it, what’s the worst that can happen. We have to adjust; we have to figure this out; we have to do this.” It helped shape that comfort in the chaos of running and leading a business.

Alejandro: In your case, after these unbelievable experiences in serving in the Army, you came back home; you came back to the U.S. Eventually, you decided to go back to school, and this was business school. So why business school?

Erik Schiemann: Good question. I knew I didn’t want to be a lawyer anymore. I’d figured that much out. I didn’t know exactly where in business I wanted to go, but I knew that to accelerate the leadership experience that I had while I was in the military, I needed to train myself in new ways. So I wanted to dig a little bit into business, economics, statistics, finance, and all that stuff. I just didn’t have a deep workbench of tools, so that’s why I went to get a business degree, not thinking I would pursue any particular avenue of study or profession, just knowing that it was broad enough that it would expose me to things that I would figure it out. That was the decision.

Alejandro: While that was going on, you got a glance for the financial sector, and what a time, as well. It was probably like going into war, as well, to a certain degree because that was Lehman Brothers, and you had a first line of exposure to what ended up unfolding in front of your eyes. How was that experience, and having access, and more than anything, learning from that, as well, for you?

Erik Schiemann: That’s the key, I think, was learning from it. I did my first year of business school. Anyone who’s got an NBA knows that your first year is about getting your summer internship. I got heavily recruited, mostly based on my military background. All the big Wall Street banks are so veteran; they’re so great at making you feel comfortable, so they recruited me in, and I chose Lehman Brothers for that summer. I think this was the summer of 2008. Here I was at this big bank learning. As a summer associate, the M&A worth, debt, equity, etc., I was just drinking from the fire hose. Every Monday, there was a meeting where the company itself was telling all of the employees that were in the investment banking area, “Here’s the status of the business. Don’t pay attention to these headlines. We’re fine.” It was a really interesting dynamic, and of course, as a summer intern, I believed it. I went back to business school that fall, and I was sitting in class with one of my friends, and he shows me on his phone the sinking price of Lehman Brothers until it eventually just went to zero. That is the magic moment where the financial crisis of 2008 started. I went from having a full-time job offer to a zero job at all. It taught me that transparency to employees is important, with some limits. I think there’s no way that the then leadership of Lehman Brothers could have come out to all of their employees and be like, “Look. We can’t figure this out. These things are spinning out of control, and the amount of debt is not even fathomable to what we have in equity.” However, it does say something about leadership when they know that and can still sit in front of employees and say, “Things are fine.” So there’s a balance there. I’m not saying that it should have been one or the other, but it definitely opened up my eyes to what is the appropriate amount of things that employees need to know in order to make good decisions for your business, but also to be that good employer and to give them the trust that they deserve and to make sure that they have the information they need to make decisions. I learned that very early at what happened to be a big macroeconomic U.S. event. I ended up finding a full-time job at the end of that year with Barclays and did about two years of investment banking with them.

Alejandro: That was the segue, as well, into what ended up being your baby today, Distributed Solar. One event that, as they say, ideas are dormant and in the back of your head, and they take time to incubate. But I think that, for you, coming back from the army, you took on sailing, and I think that was, to a certain degree, your exposure into your love for solar. Can you tell us about that and walk us through that?

Erik Schiemann: That’s a good point. When I was overseas, I was, obviously, in land-locked countries. When I came home, I was like, “I need to learn how to sail.” For some reason, it felt therapeutic. I enrolled with my dad in a sailing course in Indianapolis, Maryland, and got certified. I’m not a great skipper of boats or anything like that, but I wanted to learn how to do it, and I wanted to learn from the bottom up: how do you do this? How do you do that? What does this mean? What I realized was that whether it was that, in particular, whether it was becoming an infantry officer in the army, to be a good infantry officer, you have to first learn how to dig your own foxhole. You have to learn how to clean your own weapon. You have to learn how to do these things. What I didn’t realize at the time, but when I look back on it in reflection, whether it’s sailing, whether it’s being an infantry officer, etc., you have to first know how to do what your core is in your business and in your profession before you can then properly lead it. I don’t mean that there are people out there who can do things 1,000 times better than I can do them because there are, and I need to hire those people to bring that benefit to the business. What I mean is that when I first started the solar piece of the business that we were doing at GE, I spent my time on a local community college online course learning about solar, learning about the technical aspects of it so I could speak the lingo, so I could understand how energy is converted into energy, or solar energy is converted into energy. I had to have that so that I could speak intelligently to engineers and so I could talk about financing. The first business financial model that I had; I built. The first contract that we went out and sold, I helped write. Now, fast-forward where we are, when I had my commercial team or my structured finance team or my engineering team, they are light years ahead of that moment in my timeline. But I have a basic understanding, I have the depth, and I understand how they all fit together because I’ve been in their shoes, not at this scale, but at a scale that was in the past. I feel like that’s a really important thing that I learned from both of my own experiences, but I think it’s a real key to being good at building companies. You’ve got to learn how to build the foundation, and then you add onto it as you go.

Alejandro: You landed at GE, which was the next step in your journey. When you were at GE, the idea for Distributed Solar comes about, and you literally developed this within the organization of GE, but then all of a sudden, this ends up becoming a spinoff, and here you are, now with great people like BlackRock supporting it. That probably was not an easy thing, so how did you come across this idea, this opportunity, and then what was that process of building it under such a big umbrella where there’s so much red tape in order to execute. Obviously, when you are building something, you need speed; you need to execute very quickly. So how was that for you? I’m sure it was probably frustrating for you as well.

Erik Schiemann: It was moments of frustration and also just moments like, “What’s the worst that can happen?” Again, going back to my military days, it’s like, “Okay. If I get fired, I’m confident that I’m going to figure something out.” I came into GE after my time at Wall Street and joined the renewables business, and gravitated into the financial decision of whether or not to build a large solar factory or to not build it. A long story short, some of the analyses that I helped contribute to said, “Do not build it.” The historical view for GE was, “Let’s be an OEM. Let’s build solar modules. Let’s build solar inverters, and let’s sell those as products and then do the services on them.” In solar, that’s not the most profitable business model and definitely wasn’t a good fit for GE at the time. So GE decided to exit that. Because I was somewhat a part of that analysis, I stayed on, and it was this gaping hole of “What do we do in the solar space?” So I dove deep into residential solar thinking from an end-user perspective, a home. I did the analysis on my house, and then I dove deep into commercial industrial solar and utility-scale solar thinking from whether I own solar modules or not, who is using the electricity, whether it’s the utility, whether it’s Home Depot, and factoring to those models from a customer perspective and build out all these financial models and analysis, just put it all together. It came to me that for GE, the best place to play is not residential. It’s definitely not utility because we may compete with GE’s existing customers, so it’s got to be this sweet spot of C&I, and no one is doing it. There are a couple of big companies that are out there that are failing. There are regional people out there, but they don’t have the national scale. I’m doing this kind of with a mandate to take a look at it, but also, I didn’t know who my boss was. I wasn’t sure what to do. Instead of making a pitch internally to GE to say, “This is what we should do, I decided to take it a step further. I actually went with my wife, and I think we had two kids at the time—maybe just one kid. We drove to Boston during a week and literally went into car dealerships. I cold-called and just walked in and started pitching them solar at their sites. There was not a business. We had nothing, but I went in and said, “Hey, my name is Erik Schiemann. I’m from GE Solar. What would you need to think about in order to put solar on your site? How do you think about electricity? A couple of them I got kicked out of. Other ones, I got good insights. It definitely was uncomfortable, but it started to resonate with me that this is an underserved market that needs scale; it needs something national. Then, I started to go out and really amp up what I could do from a sales perspective. We got our first deal, which is a two-megawatt system. I went back into my leadership at the time and said, “I just sold a system. Now we need a business around it.” So I won the customer, forcing GE’s hand. Thankfully, I had supported leadership, and they said, “Yeah. Let’s see what we can do here. Let’s build it out.” I got a couple of engineers, a couple of project managers, built that system for profit, and then it snowballed from there. It was always this balance of what we’re doing versus what is GE’s core. Then what we’re doing as far as like: could this disrupt the future of GE. And it could, so I played that inside GE of that internal disruptor like, “You don’t know how much it could disrupt your business, but I will learn. We’ll learn together. I’ll show you these deals. We’ll sell a couple here; we’ll sell a couple there. Through that process, I think it helped a lot of leaders at GE figure out the future of electricity. We kept winning more deals, and we kept bringing in financing, then origination, then development. Then we had a supply chain need. I think GE and I, at the time, both thought that this was an experiment to disrupt, and it became a business. I’d have to navigate whether I was part of renewables, or eventually, I became a part of Current, and I helped start Current, which was this enterprise within GE that was designed for that end customer commercial with lighting, efficiency, and software. That came and went, and we remained. We got to a point where we were gaining market share. I got a chance to pitch to one of the CEOs at GE at the time, and I said, “I think it’s time where we make a decision as a company to either go all in 100% of something that is going to be amazing, or you’re going to let it die on the vine, and you’re going to own 100% of something, and you’re going to let it die. Or why don’t you own 10-15% of something but let it grow. It’s going to be more valuable to you anyway.” I think the timing was right. I got permission to do that. Then I took the business on a roadshow. We picked investors. We had 20 investors that showed initial interest in helping us spin the company out of GE. I narrowed it down to six, and then narrowed it down to three, and then two, and eventually went with BlackRock, and then became an independent company in 2019, distributed solar development, and then midway through 2020, I realized that it was probably time to fully buy out the rest of GE share, which is nominal at the moment anyway. Then, in 2020, I bought out the rest of GE’s minority share in the company, and here we are today.

Alejandro: For the people that are listening, what is the business model of Distributed Solar?

Erik Schiemann: We seek to provide sustainable energy for our customers, and we tend to do it with onsite generation. So, what does that mean? It means we go into your facility. We have AKIE, Home Depot, etc., where we’ll analyze currently how you buy and use electricity. Then we’ll propose to you to build a large parking structure, covered parking, with solar on the top, maybe storage on the side. We do all that. We charge the end customer nothing for it. Instead, we’ll sell them the electricity through what’s called a PPA, Power Purchase Agreement. We own the asset long-term. I own the solar assets, and I generate a return from selling the electricity from those assets. For the end customer, they get an OPEX saving because we sell the energy to them at a lower rate than what their utilities can provide non-renewable energy for, and they have no upfront CAPEX, so they get an esthetically-pleasing, a lot of time, covered parking lot, rooftop or ground-mound system and 20 years of a locked-in fixed energy rate in most cases, so that’s a good benefit. In DSD, we own the assets. We get a return from the sale of electricity. We manage them, and our business has everything from origination development of the asset, engineering, project management, structured financing, and asset management, which is not across all of America.

Alejandro: In terms of capital, you guys probably have required quite a bit of money to execute on this. So how much capital have you guys raised to date?

Erik Schiemann: Most of our money that we need comes from, not at the corporate level, but at the project level because every one of those projects that we build needs some form of structured finance through tax equity and then debt. We provide the equity piece of it. To date, I think we’ve raised almost $750 million in project-level capital. We don’t disclose how much we’ve actually raised with BlackRock, but it’s an order of magnitude to help us grow our SGNA, our budget, and they also, with us, are the sponsor equity on all of our deals, so that’s where the ownership piece comes in for all the projects that we’ve built.

Alejandro: Today, is there anything that you can share in terms of the number of employees or anything else to really understand the scope of the operation of Distributed Solar?

Erik Schiemann: Yeah. When we spun-off from GE, I think we were at 50 full-time employees, and I think today we’re closer to about 120.

Alejandro: Very cool. I know that, for you, definitely taking care of your employees is like taking care of your soldiers to a certain degree, so can you walk us through how it’s similar in that sense of ultimately taking care of your people. How do you go about that?

Erik Schiemann: It’s really important. The beauty of renewable energy space is that you have a lot of very motivated, not just financially motivated, but really passionate creative people in the marketplace that want to do better for their families and do better also for the environment. But they require a certain level of things in return for employment. I think today’s employees are, to me, very similar to my soldiers when I was in the military in that if you arm them with transparent information and the tools that they need to get the job done and candor; you treat them with respect regardless of whether they’re very high ranking or very whether they’re a new person in the organization. Then you look after them, and you make sure that they know that “Mistakes are going to happen, and we have each other’s backs. The biggest thing we can do is learn from those mistakes.” It’s the same thing that I tried to do when I was in the military. You lead from the front, but you take good care of everyone that’s coming with you. It has spilled over into my business career. With our employees at DSD, I still have 120 people. We have bi-weekly meetings where we go over the financials of the company with every employee so they can see exactly where we are versus where we’re trying to be at a goal level. They can click on our CRM and see those stats anytime they want to with all the real-time data in the business so they can make their own informed decisions. The best employees are those that can make real-time excellent decisions in the moment so that you can keep projects moving. I find that you have to trust, and as part of that trust, you have to take good care of them, and you have to educate them, so they understand your business model, your goals, where you’re trying to take the business, how we make money, and how we create value. In return, because we’re renewables, employees, as a whole in a market, are so topnotch and are so excellent, they respond. Not every company, I guess, leads like that, and I think there are a lot of people who are dying for that opportunity. It makes them feel a little entrepreneurial. They get to take some ownership of their process, their decisions, whatever because they have the macro picture. They understand what the left and right limits are to make those types of decisions, and I think that has helped us grow the business in a good way.

Alejandro: You were alluding to goals and then understanding where things are heading, so imagine you go to sleep tonight, Erik, and you wake up in a world where the vision of Distributive Solar is fully realized. What does that world look like?

Erik Schiemann: It would help me sleep if we were at that vision. [Laughter]. What does it look like? I think it’s a vision where every major parking lot in the United States that has no other use besides parking cars, and it’s just blacktop is covered with solar, is connected to storage, and that electricity is going into buildings that no longer need to buy coal power or no longer need to buy natural gas and that DSD had something to do with that full transformation and created value along the way, both for our end customers, and obviously, for ourselves. That would be a remarkable day. I think we’re in the very early endings of what is the path to get there. I think people are seeing that is a clearly open opportunity and a good opportunity in the next five to ten years to get just there, and we’re seeing a lot of movement in the industry to get there. I think that’s what I’d like to see.

Alejandro: Now, imagine that I give you the opportunity, Erik, of transporting you back in time, and you’re able to get a chance to meet the younger Erik. We always know that our younger selves never listen, but imagine that younger Erik actually puts his ear closer to the older Erik where you have that chance of giving your younger self one piece of business advice before launching a business. What would that be and why, given what you know now?

Erik Schiemann: That’s a good question. I think it would be the advice—while I always believed in it, I could have had a couple more people telling me, so I’d try to tell myself, “Hang in there. It will all work out. Just because you have a plan doesn’t mean it’s the plan that’s actually going to be the way it goes.” I was always comfortable with this that we talked about managing through uncertainty and all of that, but I think it would have been helpful to go back and have my future self tell my past self, “It’s going to be okay” because there are a lot of moments along this career where it felt like, whether it was going into the military, or whether it was going overseas, or coming back, or being at Lehman, or even going to GE and not knowing if that was the right call where it didn’t always feel like the right decision. I look back on it now, and I have all this confidence, “Oh, it all worked out. It was totally the right decision. It all fits together.” But, at the time, it didn’t feel like that. It felt uncertain. It felt scary. It felt anxiety-causing. So I would go back and tell the younger version of me, “Hey, there’s a plan here, and it’s all going to work out. Have faith in it. Stay humble. work hard, and learn, and nothing bad will happen.” That’s probably what I would say.

Alejandro: I love it, Erik. So for the folks that are listening, what is the best way for them to reach out and say hi?

Erik Schiemann: Probably through my email. It’s erik.schiemann@dsdrenewables.com. That’s the best way to get directly ahold of me.

Alejandro: Fantastic. Erik, thank you so much for being on the DealMakers show today.

Erik Schiemann: Thank you for having me. I really appreciate it.

* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.

How To Memorize Your Pitch Deck

Alejandro Cremades Founder at acremades@gmail.com

2021-06-23

How to memorize your pitch deck? Presenting your pitch deck in front of investors can be intimidating.

Every little detail has to be strategically done – from how you present yourself and the presentation style to perfecting your script.

To deliver a stellar pitch deck, it needs to be tailored to the audience. If each pitch is customized, memorizing them can pose a challenge.

If you sit down and try to memorize the script, parrot style, you might not only forget parts mid-pitch. But you will find yourself losing personality and likeability.

Memorizing a pitch deck is not just about saying a script word for word at every meeting. It is about knowing what message you want to get across, how it should get done, and how the audience receives it.

You are the voice of the product or service, and how you deliver your pitch deck will be the deciding factor on whether you land that much-needed investment.

*FREE DOWNLOAD*

The Ultimate Guide To Pitch Decks

Why You Should Memorize Your Pitch Deck

Memorizing a speech or pitch is not as straightforward as you might think. We are not machines, and it is easy to make a mistake that can derail the entire speech.

Memorizing the script is the first step in delivering the perfect pitch. There are advantages to memorizing a pitch:

  • Allows you to hold eye contact with the audience.
  • The audience will know you are prepared.
  • You can move freely around the stage and use hand gestures because you are confident in your speech and don’t need to use notes.
  • Memorizing will help you see faults in your pitch and areas to improve.

Memorizing your pitch deck is essential but know that it is not without faults. If you forget a key point because you are too focused on the minor details, the pitch results will fail.

Memorizing your pitch can also come off as automated or robotic, and you could fail to connect with your audience.

Before we talk about how to memorize a pitch deck, let’s discuss how to share information with investors. Check out this video I have created. You’re sure to find helpful tips you can use.

How to Memorize Your Pitch Deck

Changing the way you learn is the first step in turning it into information you will never forget. Here’s how to memorize your pitch deck:

Write the speech

The first step is to write out the script exactly how you want to say it. If you are not comfortable writing, you can always find a freelance writer on platforms like LinkedIn, Fiverr, and Upwork.

If you want to do this on your own, try speech to text. This way, you can have a rough idea of the direction you are going in and how you want it to sound. It will be more of an outline than the whole script but a good starting point.

Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

 

Rehearse the script

Say your speech out loud. It is okay to read it multiple times so you can find the areas that need work. This is the start of the memorizing process.

Throughout the sculpting of your script, you will delete, edit, and reorder small and large paragraphs to sound better. If you wrote the script from start to finish, you would probably edit it several times until it sounds natural.

Memorize the script from big to small

The ideal way to memorize a script is to do so hierarchically. Start with the big paragraphs first, then specific phrases, and lastly, specific intonation words. Memorize it in order this way because few speakers will remember the small details.

Memorize the big chunks

The big chunks are the broad strokes of the message you want to get across. This is your product, how it works, financial projections, and how the audience will benefit from investing in your product.

When memorizing your pitch, you want to highlight the main points and cover them on a page. Try to recall them in the order in which you wrote them and deliver the speech without worrying if you got it right.

When you get done, think about the points you missed and ask yourself why those are the ones you forgot and try again.

Memorize the small points

Once you have memorized the big chunks, move on to the smaller parts. These are the phrases that represent the meaning of everything you want to say.

To help you memorize these points, quiz yourself. Describe the problem and recall the small points from memory. Check the list and see if you got them right. To memorize the pitch, combine quizzing and rehearsing.

Memorize the delivery

By now, you should have memorized the big chunks and the main points of the pitch. By doing it in this order, the main structure of the speech should be in your memory.

Next, memorize how you will deliver the pitch. How will you stand? What tone of voice do you want to use? Make these microscopic changes, including the timing.

The delivery

If you are more introverted, performing the speech might give you some anxiety. Focus on the high-level chunks – not reciting the words verbatim. The important thing is to remember what you want to say and how you want to say it.

Don’t get stuck trying to memorize the speech verbatim, or you will lose the pitch structure. You must be focused on recalling the points.

If you have to pause to think about them, you don’t know them well enough to give the speech. Continue to rehearse the pitch, and soon you will have it memorized.

Memorizing the big chunks and the points provides you with a lot of flexibility.

If you are to get interrupted because someone stopped the presentation to ask a question or you have forgotten a word, you have remembered the meaning of the pitch – not just the word order.

That way, when the interruption is over, you can get back into the speech seamlessly instead of saying irrelevant sentences. There are no do-overs when delivering a pitch to investors. Ideally, you want to deliver your script without sounding robotic.

It needs to be memorized but conversational. Developing this skill will be useful to you throughout adulthood, and it’s never too late to start.

Record Yourself Presenting the Pitch

The best way to find out what you are doing wrong in your presentation is to record it. There are numerous reasons why you should record yourself presenting the pitch.

  • Say it out loud: People who are experts in memorizing say that the brain can retain information better when the script gets read out loud repeatedly. You can not only say it but hear it being played back to you. So, learn how to memorize a pitch.
  • Find areas to improve: Replaying the recording will help you see if you are making mistakes and whether the content flows well. Is there a working order of the pitch? How is it structured? What is the best way to improve the content?
  • Improve body language: By recording yourself performing the pitch, you can see your body language. Are you using your arms too much? Do you fidget with your pant pocket or nervously use your hands too much as you speak? Seeing yourself perform the pitch will help you see the changes that need to be made regarding body language.

The key to success is data! To know how your pitch will perform, you need to practice in front of industry peers, colleagues, or someone you feel is trustworthy and give you constructive criticism.

Get them into playing the role of the key audience (investors). Practice your pitch deck in front of them and have them ask spontaneous questions, and critique your content, delivery, and body language.

Remember never to get offended! They are there to help you. They’ll help you understand how to memorize a pitch.

Practice your pitch from memory!

Present your pitch deck without looking at cue cards or your computer. You have your content memorized, and you should be able to deliver it flawlessly without referencing the material.

You have invested significant time in perfecting your script and delivery. If you are still struggling to memorize it, start at the beginning and repeat the memorization steps.

See How I Can Help You With Your Fundraising Efforts

  • Fundraising Process : get guidance from A to Z.
  • Materials : our team creates epic pitch decks and financial models
  • Investor Access : connect with the right investors for your business and close them

Book a Call

Tips When Memorizing Your Pitch Deck

Many people believe that if you memorize your pitch that it would seem less authentic. It is partially true. If it is not adequately memorized or rehearsed enough, you might sound like a robot.

But if you get prepared, focused, and enjoy the moment, your pitch will sound conversational and authentic. When you are practicing your pitch deck, speak naturally and remember the core elements of your content.

When you practice in a conversational tone, it will take the pressure off you to not worry about remembering every word.

Here are some tips when creating and memorizing your pitch deck:

You are a storyteller

Telling a story is a proven method to capture the audience’s attention. Don’t just present the numbers to investors, or you will have them yawning from the beginning.

Telling a story will make your pitch unforgettable. You can tell them the startup history and how you got there – even data-driven investors will appreciate a good story. Storytelling is also an excellent method for memorizing your pitch.

Enthusiasm

When presenting your pitch, do so with enthusiasm. Don’t hold back on the excitement of your product or service.

When someone displays a passion for the business, it is something that you can’t fake. Being enthusiastic won’t diminish your overall intent of getting investors – it will enhance their experience.

Body language

While it is easy to get stressed when delivering your pitch, your body language will give away how you feel to the audience, which can be a distraction.

Recording yourself performing the pitch will help you see the small body language movements and not draw attention away from what you are saying.

Dress to impress

You have your pitch deck ready. All the equipment has been tested, and you have memorized your script. Everything is ready to go except your attire!

Don’t skimp out on wearing a professional outfit and dress to impress. Just as you shouldn’t underestimate the importance of a good script and slide presentation, don’t underestimate the importance of a good suit.

Focus and Memory

Focus is when you are concentrating on the script, and a diffused mode of thinking is when your mind wanders and reaches its own insights.

When you try to memorize your pitch deck, you need to blend both focus and diffused thinking because retention occurs. Alternate between the two by focusing and taking breaks so you don’t wear yourself out.

Begin by working in focus mode until you have reached your limit. If you feel you can’t retain any new information, it is time to take a break.

You might think that taking this many breaks is counterintuitive. It does the opposite. It refreshes your mind and allows you to start over where you left off more focused than when you stopped.

Experts also conclude that you should read the information you want to retain before bed so your subconscious will begin to memorize the information while you are sleeping.

Learning how to memorize a pitch is an essential skill we all should adopt.

It is an investment in your future because if you can memorize pitches and important information, you can recite your knowledge at the drop of a hat whenever asked.

Memorizing your script takes time, and you should work on it the moment you know you will meet with investors or from the first day you get the idea.

Study the big chunks first and move on to the key points. Remember to rehearse and record you delivering your pitch so you can edit as needed and find areas that require improvement.

Having all the key points of your pitch on hand in memory will give you the confidence to deliver a perfect pitch every time.

You might just run into an investor on an elevator, and you have the information ready! So, knowing how to memorize a pitch is critical for an entrepreneur.

Be charismatic and dress to impress. You believe in your startup, and you should make investors believe in it too. When memorizing your pitch, think about what you want to happen – the end result, and then work backward.

You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

This Entrepreneur Raised $170 Million To Modernize Dental Benefits

Alejandro Cremades Founder at acremades@gmail.com

2021-06-22

Alex Frommeyer has been a builder all of his life. He has taken that from childhood construction projects to engineering technology, and now creating a large and fast-growing startup.

During his appearance on the Dealmakers Show, Frommeyer shared his experiences raising $170M in capital out of Ohio, working with investors and board members, and even being fired as the CEO of your own business. Plus, Insurtech, and the future of dental insurance in America.

Listen to the full podcast episode and review the transcript here.

Born To Build Things

Alex Frommeyer grew up on a hill in the woods of Kentucky. He spent his childhood days running the woods. His grandfather gave him some tools, nails, and lumber, which he dragged off into the wild and began to build treehouses with.

He ended up building a whole neighborhood of tree houses. And he loved the process more than the finished product. He says he would build one, play in it for a few days, and then begin building a new one from the ground up. The uniqueness of each project was what he loved best

He hasn’t stopped building things since. Building tree houses wasn’t a job or TV career back then, so when asked, his father suggested he try civil engineering.

Finding Your Cofounders

Frommeyer attended the University of Louisville in KY, and now sports degrees in structural and civil engineering. University is also where he met his current cofounders.

He and his two co-founders all started college at the same time. They were in the same classes, studied together, hung out together, and became friends.

Initially, entrepreneurship and starting a business seemed something far off in the distant future. It seemed like it was something you do in your 40s, after gaining a couple of decades of experience working.

They were sent out on internship programs in school. Which were designed to bring them closer to employers, give them a taste of what work was really like, and hopefully lead to a job with those companies.

It pretty quickly had the opposite effect on Alex and his two buddies. They were seriously under impressed with what working as an engineer for big companies was really like.

They wondered if there wasn’t something more engaging and creative they could spend their time on instead.

Although they were all engineers, they learned to divide and conquer different elements of the business.

Alex tackled business development.

See How I Can Help You With Your Fundraising Efforts

  • Fundraising Process : get guidance from A to Z.
  • Materials : our team creates epic pitch decks and financial models
  • Investor Access : connect with the right investors for your business and close them

Book a Call

Another of them took on the legal, regulation, and compliance side of things. Another found that his superpower was dealing with people, and chose to head up HR and organization.

Alex had been renting a house off-campus. So, their first venture together was turning their living room into an office with folding tables and running a part-time engineering services business out of it.

Frommeyer was tasked with networking and finding customers. Which he did pretty well. They found all types of projects from R&D to building websites, custom electronics, creating patents, and intellectual property.

They enjoyed learning as they took on all of these new projects. Soon they found they were spending a lot more time in the living room working on the business than in class.

Yet, they also realized that they were only still working for others. They were putting in all of this time and effort to make other people’s dreams a reality and to create assets for them, and help them go to market.

Beam

In their search for ideas for their own business, they found they all had dentists in their families, including Alex’s sister. They found the dental industry to be a huge market that was fragmented and lagging in innovation. And, they perceived that there was a lot of unlocked value there.

As they began digging in and unpacking it, they evolved their idea into becoming one of the insurtech businesses.

They had a lot of ideas around creating and empowering preventative dental care. That’s how they thought about smart toothbrushes that would collect data and help to optimize insurance and gain insights into risks and anticipated costs.

They soon realized that in order for technology like these to work, they would have to start by digitizing the entire industry. So, they decided to build their own dental insurance company.

They now provide their services through employers with anywhere between two and 2,000 employees.

Beam now has close to 300 employees of its own, is operating in 42 states in the US, and have seen revenues triple in the past 24 months. They’ve also raised $170M in capital, which is even more impressive given they are based out of Ohio.

Storytelling is everything which is something that Alex Frommeyer was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Of course, that doesn’t mean it has been a breeze from day one. Alex shared with us how they almost ran out of money while waiting for regulatory approval to be able to even market their services and product.

Each state has its own regulations and licensing. They had already raised money and built everything out. Yet ended up just weeks away from running out of operating capital when the Department of Insurance in California finally stepped up and gave them the green light.

That still meant getting out there with marketing before they could make sales and bring dollars back in, or prove they were gaining traction to justify further investment.

Listen in to the full podcast episode to find out more, including:

  • How not to get fired from your own company
  • The value of transparency throughout your organization
  • Company culture
  • The future of the dental business in America
  • Alex’s book recommendation
  • His top advice before starting a company

SUBSCRIBE ON:

Alex Frommeyer On Raising $170 Million To Modernize Dental Benefits

Alejandro Cremades Founder at acremades@gmail.com

2021-06-22

Alex Frommeyer has been a builder all of his life. He has taken that from childhood construction projects to engineering technology, and now creating a large and fast-growing startup, Beam. He has successfully raised funding from top-tier investors like Nationwide Mutual Insurance, Drive Capital, Georgian, and Banner Ventures.

In this episode, you will learn:

  • How not to get fired from your own company
  • The value of transparency throughout your organization
  • Company culture
  • The future of the dental business in America
  • Alex’s book recommendation
  • His top advice before starting a company

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

*FREE DOWNLOAD*

The Ultimate Guide To Pitch Decks


Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Alex Frommeyer:

Alex Frommeyer is the Co-founder and CEO of Beam Dental, a dental benefits company that offers employers a fundamentally unique approach to dental coverage by incorporating hygiene behavior into policy pricing.

He has two engineering degrees from the University of Louisville’s Speed School of Engineering, where he graduated magna cum laude and founded his first company in 2010. He is a Forbes 30 Under 30, a Rock Health alum, and a member of the Kentucky Entrepreneur Hall of Fame.

See How I Can Help You With Your Fundraising Efforts

  • Fundraising Process : get guidance from A to Z.
  • Materials : our team creates epic pitch decks and financial models
  • Investor Access : connect with the right investors for your business and close them

Book a Call

Connect with Alex Frommeyer:

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m super excited. We have an amazing founder today. He’s been building and scaling a really interesting business that started first touching on the service side and then figuring out how to productize it and how to scale it up. They’ve been at on incredible journey and remarkable. So without further ado, let’s welcome our guest today. Alex Frommeyer, welcome to the show.

Alex Frommeyer: Hey, thanks for having me. It’s good to be here.

Alejandro: Originally born in Kentucky, and you were there in the middle of the woods. How was life growing up there?

Alex Frommeyer: It’s true. I’m from Kentucky originally. I grew up on top of a big hill. We lived on maybe 100 acres. It was mostly woods, so that’s where you could find me pretty much every day growing up. I was running around in the woods, and I ended up taking a little section of those woods and building treehouses. But not just one treehouse; I built a whole neighborhood of them. I ended up building, I think, nine different treehouses, by myself, in the woods. My grandpa gave me a bunch of lumber, nails, and tools, and I dragged it off into the woods and started my love of building things. That still persists today. That’s why I went to engineering school and why I have done startups my whole career as well.

Alejandro: How was that transition because here, you were exposed to the love for problem-solving, for building those tree houses? But how did that translate or shift into engineering? On the engineering side, you knew, “I’ve got this. I love this. Let’s take it to the next level on the problem-solving side?

Alex Frommeyer: I think what I noticed is that my interest when I was putting together one of these treehouse projects was, I actually didn’t enjoy the finished product as much as I loved the process. I remember asking my dad one day what I should do when I was a grown-up because I loved building treehouses so much, and I knew that wasn’t a job. He told me I should be a civil engineer, so that’s what I technically am. I have a couple of degrees in civil and structural engineering, and I’ve always maintained this passion for building things, but much more so the process, the imagination of how can I turn this tree with this non-standard set of branches and different challenges. How do you get into the tree? How can you craft the house? Where do you go to make the right platform? There are all these unique challenges, and that was what I found myself falling in love with. Once I built the treehouse, I’d play in it a couple of times, and then it was like, let’s go find another tree and do it again because I loved the process of building. For me, going to engineering school and starting companies and building something new is just a different version of that same process that I’ve been in love with since I was six or seven years old.

Alejandro: That’s amazing. In your case, too, you went to the University of Louisville there in Kentucky, so you didn’t go far from home. But this allowed you and gave you the opportunity to meet your co-founder. What was that process of meeting them, and then how did you guys go about thinking, “Maybe there’s something that we could do together.”?

Alex Frommeyer: Yeah, my co-founders and I all started in Engineering School at Louisville at the same time. It started out pretty simple. We were in a bunch of classes together, all those entry-level calculus and physics courses and the engineering program. We were just friends. We did homework together. Two of us were right next to each other in our freshman dorm, so we were friends, and we hung out a lot. I think at that point, I had already been interested in being an entrepreneur and owning my own business, but I had no idea what that meant. I really didn’t know any entrepreneurs. I assumed that you had to be 40 years old and have 10-20 years of experience before you could ever own your own company. So I thought of it as this distant future thing I might like to do one day, and I didn’t think that much more about it. It was really interesting that after some period of time, maybe it was a couple of years into the engineering program, we went on these co-ops or internship programs, and we worked for—this was part of our engineering school—you worked for a real-world business, making real money, operating and going to the job every day. It was structured into the program, so you did three semesters of these co-ops, and it’s supposed to help inspire you to build relationships with those employers to then get a job at one of them, ideally, right as you graduated. But, for us, it had the opposite effect. We saw how these companies operated from the inside and the type of work that we would do when we finished our undergrad program, and we thought, “Oh, is this it? Is this what being a professional engineer really means?” I think that started to coalesce this idea that maybe there was something more creative and more dynamic that we could do with our time. At that point, we started working on building our own company in the background.

Alejandro: That’s very interesting. One thing that I find amazing is that the three of you guys had similar backgrounds because, typically, when you go for co-founders, you try to see who can cover what. In this case, you had similar backgrounds, so how did you go about dividing and conquering?

Alex Frommeyer: Yeah. That’s a really good question. I would love to say that it was incredibly intentional at the very beginning when we were deciding to go into startups together, but maybe it was more intuition-driven. We’re actually very complementary to each other from a skills-tradeoff perspective. Even though we all have technical backgrounds, I was always the very sales, business development, and marketing-focused of the three of us. That was my core interest. I was technical-based but very interested in, let’s call it, business development. Another one of us was so interested in legal and compliance and regulatory that he actually went to law school for a little bit and passed the patent bar and still, today, does a lot of that work in our insurance product, which is everything having to do with the department of insurance, regulatory infrastructure, legal and compliance, all the regulatory affairs, and that’s his special skill set. The third helps run our people’s team. That’s Dannon, amongst our co-founders. His superpower is being able to read and understand people really well, He’s helped many of our teams at Beam, focuses on organizational design, and HR, and people function. We all have this technical home base where we share a lot of interest, but we each wanted to operate in a slightly different arena, and that’s allowed us to adapt and always be focused on taking our unique skills and molding them to whatever the business needs.

Alejandro: In your case, you came out of university and meeting your co-founders, but you guys had no idea of dental. Obviously, you landed there. You had people in the family and friends that were involved to a certain degree with it, and you started thinking about this more from a service perspective, but how was that transition—first, with the understanding that this was what you wanted to tackle, this segment, to then progressing from a service-based business to an actual product or platform-based business?

Alex Frommeyer: Our first company was so simple. It was an engineering services company. We were undergrads. We had no idea what we were doing. We just knew that we wanted to avoid taking jobs at the companies where we had done those internships. We took my living room, a house that I was renting just off campus, and every day, we would use this living room space. We transformed it and put a bunch of foldout tables in it, just a bunch of chairs, and we would do either homework, working on our coursework in classes, or you would go into the other room where we had some other tables set up, and that was where our business was. Our business, by the way, was pretty simple. My job was to network, starting with the university, which was my only network, and meet as many people as possible, tell them that I wanted to use technology to build products and services, whatever that meant, and “Do you have any work for us?” They would introduce us to other business owners or people that were doing research at the university. We eventually built this network of people that were willing to pay us minimum wage or maybe a little better to work on some R&D projects or some little things that were sitting on a shelf, and we did everything. We said yes, to everything. So for the first two years, the business was me going out and trying to win work, which would have been building a website, doing some custom electronics. We did a lot of technical writing. We did a lot of patents. We worked on a lot of intellectual property. We did stuff that was decidedly very tech-oriented and then some work that was pretty far afield from it. But we sunk our teeth into the work. We loved the process of learning and iterating through it. Every day, we’d come home, and you’d basically have to decide which of the rooms were you going to walk into? The business room or the homework room? Over time, it was clear, just based on where we were spending all of our physical time. We were much more interested in the business than we were our classes. We started migrating more and more of our time into the business, but there was still something missing. We were doing all this work for other companies, for other researchers, for other people helping them take their ideas to market. What we wanted to be doing was taking our own ideas to market. The problem was, we didn’t have any ideas. So I actually turned to our family members. We all have families that are in dentistry and in the dental industry, including my sister, who is a dentist. We started trying to develop products that would be our own intellectual property related to the dental industry. We saw that dental was this big, valuable, but very fragmented and under-innovative market, and we saw that market probably had value locked inside of it that no one else was focused on extracting. Our intuition was right. What we saw in the early days was Beam, which we initially styled as a vendor, a company that would build technology for large dental insurance companies could actually itself become a dental insurance company. So without knowing it, we had created one of the first insurtech businesses. That now seems super obvious, but back in 2012, 2013, when we started Beam, that phrase, insurtech, didn’t exist, and we didn’t know day one that it was even possible to build an insurance company from scratch.

Alejandro: For the people that are listening, Alex, what ended up being the business model of Beam that everyone knows today?

Alex Frommeyer: We started Beam as building the industry’s first and only dental wellness program. The way we thought of it was that dental insurance companies don’t have very much and very good data about who is the most likely to go to the dentist and what services are they going to need when they do go to the dentist? We built a wellness program that would focus on preventative care such that people would a) get the products they need: toothbrushes, toothpaste, floss, etc., to have good preventative care. That means, hopefully, fewer visits to the dentist over time, and you don’t need a bunch of root canals. That would be the idea. Then paired with that would be technology via an IoT solution, which was the Beam brush, which pulls in data about the usage of the brush, and we thought that data could be used in the context of underwriting. If people are taking great care of their teeth every day, it’s less likely that they’re going to need a bunch of intensive dental work done over a long period of time. That was originally the basis of the business. Then when we realized that the whole industry needed to digitize itself to be able to even work with a company like Beam, we decided to solve the problem ourselves by building our own digitally-native dental insurance company from scratch. Today, Beam works with employers from two people all the way up to 2,000 people and everything in-between. We bring them a best-in-class, totally unique digital-first dental insurance solution. Then we also do some other employee benefits like vision insurance and life and disability as well.

Alejandro: As you were alluding to it, it was like a first-timer for someone to do something like this. I’m sure that reaching product/market fit was a beast to accomplish, so what was that process like, and when did you realize, “I think we’ve got something here.”?

Alex Frommeyer: It was a brutal process, and it almost took us out of business, actually. We had built the first version of the business, the wellness program, and we raised some venture capital to help support our expansion into dental insurance. It’s complicated. There’s a Department of Insurance in every single state, so if you want to operate an insurance company, you have to become accepted by the Department of Insurance. This was like a very binary bet. If the Department of Insurance said we couldn’t enter a state, and we needed at least one, then we couldn’t even legally market our policies, and the business would be over. We had done all this work with the Series A that we had raised to build all of the infrastructures, all of the software to support billing and invoicing and enrollments, in claims processing, all of the necessary pieces of the puzzle. But we were burning capital every month, of course, and no other investor was going to invest in what needed to be the Series B until we had some sort of sales traction and product/market fit. The problem was that there was no Department of Insurance that had said, “Yes. You can come market in our state.” This was 2014. We were within about 30 days of running out of money when the Department of Insurance in California said, “Yes. You can enter the state and begin marketing. At that point, the business had to lay off over two-thirds of our employees to just have enough money to survive the period of time from when the Department of Insurance said, “Yes, you can begin marketing to actually then sell some policies and show some early traction. It was a brutal process doing a RRIF. I was actually fired from being the CEO for a while. I had to climb back into the good graces of our board of directors, and we had to show that Beam deserved to live and that we really had built a solution that was different and better than what the industry had at the time. Luckily, we built some phenomenal relationships with broker partners and distributors. Small businesses everywhere started buying Beam as a clearly differentiated product to the Delta Dentals and the other product out in the market for small businesses at the time, and the company just took off. We ended up selling about 10,000 policies within that first year. That allowed us to raise the next round of capital. Just before our plane hit the ground, we were able to pull it up, and now Beam has 260 employees. We’re operating in 42 states around the U.S. and growing quickly.

Alejandro: I’m that experience for you, especially the layoffs, was a really tough part of the journey for you. Like anything, in those difficult situations is where there are lessons to be learned. For you, what was the main lesson to be learned, and also, what did you do to keep pushing yourself during those dark days?

Alex Frommeyer: I think the biggest thing I learned was how to be a better partner to our board, our investors, and just the folks around us. We’re first-time founders, so we were in business just ourselves, just the three of us originally. I had never had a board before. I don’t know why I thought the way that I thought at the time, but I viewed the board and inner investors not as an actively adversarial relationship, but I viewed it very skeptically. I always wanted to give just enough information, but not too much, because I didn’t want anybody to know what my real plan was. It seemed so ignorant now in retrospect. But at the time, I felt like there was a ton of strategy behind how I was communicating to the board. I really needed to become, and I did become a completely different type of leader because of that experience, which was, I realized because I had to realize this, that I wasn’t bringing my key partners in and showing them the problems and allowing them to help me guide the company through adversity and guide the company through the toughest days. Instead, I was actually creating skepticism from them by not letting them fully in the door, showing them only what I wanted them to see. So even though it was obvious that the company wasn’t going well back then, I didn’t appear to either understand that was true, or I was actively subverting the process instead of being transparent and open about it. I’ve taken that to heart and made it my exact leadership style where whether it’s our board and investors, the market, my management team, or all of our employees, in a broad sense, we communicate frequently, opening, and very transparently because I want hundreds of people helping me solve these tough problems. Step one is knowing what the tough problems are. We’re very communicative and collaborative at Beam because I’ve seen what it looks like when you aren’t collaborative and communicative, and I’ve seen how beneficial it is to have that transparency iterated throughout the business. I think that’s, for sure, the biggest thing I learned through that period of time.

Alejandro: That’s amazing. A lot of times, you see it where entrepreneurs have that mentality, too, and I think it’s learning the dynamics and also how to leverage your board to your advantage so that you can push together. You see that a lot on boards where it’s more rather than discussing and figuring out how to resolve strategic issues, it becomes more like reporting, and that’s it kind of dynamic, which ends up being very toxic. Would you say that was a shift as well that you guys experienced?

Alex Frommeyer: Yeah, for sure. Entrepreneurs often become entrepreneurs because they don’t fit well within the system or the infrastructure, or they want to actively rebuke the system. I’m exactly the same way. That’s what I think we observed; my co-founders and I observed when we were in engineering school that all this bureaucracy and infrastructure and how these big businesses operate is really unattractive. We have a bit of that rebel streak in us, for sure. So, ironically, in order to be a successful entrepreneur, you have to accept that system again. There are ways you can make it work for you and be very thoughtful about how you construct your board, for example, and how they can be strategic thinking partners instead of just, to your point, folks that you report some numbers to, and then everybody goes home. That is advice that I constantly find myself giving to other founders and entrepreneurs that I know because many of us come from a world where you’re trying to get away from the infrastructure of a thing like a board of directors. What I’ve found is that by fully embracing it and trying to make it work for me instead of turned into that tension or that adversarial relationship, it’s actually been hugely valuable to being successful and growing over the past few years.

Alejandro: How much capital have you guys raised to date?

Alex Frommeyer: We’ve raised around $170 million all-in, which is something we’re really proud of, in general, as a business. But here in the Midwest, where we’re based in Columbus, Ohio, $170 million is incredible, and we’re seeing more and more businesses based in not California, New York, Boston, Seattle, that are raising big rounds and building big successful businesses. It’s also a really fun time to be doing what we’re doing in a place like Ohio.

Alejandro: Do you think that it has gotten a little bit easier over time. How has that been, the transition of going from one financing cycle to another? As we’ve heard, you had the Seed to Series A. Then in Series A, you had a big breakdown, and then you continued from that until you raised the capital of $170 million that you’ve raised in total today. How has that progression from cycle to cycle been?

Alex Frommeyer: We’re lucky in that the business has continued to perform, grow, and develop quickly, and we’ve had access to capital, and we haven’t had any other moments like that one that almost took us out completely as a company. I’m also the type of person that’s very uncomfortable with somebody else’s money. Investors are, of course, seeking a return, and we’re using the capital the way we should be to help grow and develop the business quickly. But culturally, we’re the type of people that don’t come from money, and we’re very uncomfortable owing someone something.

Alejandro: Yeah.

Alex Frommeyer: So we’re waking up every day uncomfortable with a sense of urgency and tenaciously working to build the company as quickly as possible and build something special in our market because, of course, we want to give our investors an incredible return, and we will. But we also want to build a business that can stand the test of time, and being profitable and not being addictive to all of that venture capital is an important component of it, so I think we’ve been more profitability-focused than many other businesses, and we’ll continue to be thoughtful and strategic with capital, but we feel like we’re in an incredible position today. We raised an $80 million round at the beginning of this year led by Mercato Investors out of Salt Lake City. They’re a phenomenal partner, and it’s been a great ride.

Alejandro: In terms of size, so the people can hear it and get a better sense of the scope of Beam today, how big is the company? Is there anything that you can share in terms of the number of employees or anything else?

Alex Frommeyer: Yeah, sure. Starting back in the living room days with three of us, we are now 270.

Alejandro: Wow.

Alex Frommeyer: We’ll go to 300 this year at Beam. We’ll cross 300 employees. We’ve gone from that first state, which is California, to now operating in 42 states around the U.S. So employers in 42 states are actively buying Beam policies, which is really exciting. The company revenues have tripled in membership over the past two years. So we’ve seen really rapid growth in our solution being, not just different, but better, the easiest in the market to work with, the smartest underwriting models in dental insurance, and with that preventative focus, the toothbrushes, etc., we have a unique solution that employers love distributing as an employee benefit to their teams.

Alejandro: Alex, imagine that you go to sleep tonight, and you wake up in a world five years later—a tremendous snooze. You’ve never slept like this in your life. You wake up in a world where the vision of Beam is completely realized. What does that world look like?

Alex Frommeyer: Beam at its terminus or at scale, I think, has completely revolutionized how the dental industry works. We started the business because we learned not just that dentistry is fragmented, but the fact that really stuck with us is that 100 million Americans don’t have dental insurance. There’s a huge uninsured population, which means when those 100 million people need dental services, they’re paying for it out of pocket, and dentists aren’t cheap. That means that often, people just don’t get care, and they’re living in pain because they have an abscessed tooth or they don’t get cleanings for years and years because they either don’t have the money or there is some sort of inconvenience of not having that coverage already built. So we think, similar to health insurance, with the Affordable Care Act, which focuses on getting every American coverage of some type or coverages like auto insurance where you legally have to have auto insurance if you’re going to drive a car. Dental insurance is not really subject to that same level of legislation interest. So we’re trying to get more people coverage the old-fashioned way, which is by building a compelling product that you want to own because you’re going to get value for it. Similar to any other financial service, people will purchase a financial service if it has some sort of value or return to it. So we think Beam has this unique opportunity, and five years from now will certainly be there, we hope, to totally revolutionize via our technology the value proposition of dental insurance at its core such that every American has it, whether it’s through Beam or another provider, we think we’ll be the iconic category winner of dental insurance over the coming years.

Alejandro: Now, imagine if I have the opportunity of putting you into a time machine, and I bring you back in time to that time where you were still in the university, you and your co-founders, and thinking about something you would do and bring to life, and you had the opportunity of going back in time and assuming that younger Alex is going to be listening, you are able to give yourself one piece of advice before launching a company. Based on what you know now, what would that one piece of advice be that you would give to your younger self?

Alex Frommeyer: I’ve learned so much about leadership over the past few years and just how much it transforms a business when there’s a real investment in culture. If I were starting a new business today or going back to the very beginning, the intentionality of culture is something that I arrived at over time, but in the earliest days, we had a ton of intentionality because my co-founders and I were such great friends, and we had built such strong relationships before we ever started a business together. It would be amazing to replicate that level of relationship and multiply it throughout the whole team the whole time. So, today, when we are investing deeply in our culture, both articulating our culture and then reforming it or refining it over time, we’re almost playing catch-up. My goal is to go back to just the three of us in that living room and trying to figure out how to replicate the feeling that I had when it was just the three of us is what a great culture, in my view, would be because it worked so well back then and getting it, of course, to multiple to 300 people is impossible, but that’s what we’re going for. I think if I go back to those days, what I would be advising myself to do is be really intentional about the first employees, the first ten, the first 50 to really create that intentionality around that living room culture that we had built so that way, the whole company scales with a level of thoughtfulness and a level of transparency that we only later came to.

Alejandro: I love it. Alex, what is one book that you wish you would have read sooner? Which one would that be and why?

Alex Frommeyer: No Rules Rules. It’s a new book, so I’d have to take that in the time machine with me. Reed Hastings from Netflix’s latest book, and it’s a phenomenal kind of undressing of the Netflix culture and how they went from their living room, effectively, to the Netflix way, now on a global scale, and it’s something that plays out a ton of corollaries and has great advice on exactly some of the topics we’ve touched on today.

Alejandro: That’s great. And for the folks that are listening, Alex, what is the best way for them to reach out and say hi?

Alex Frommeyer: My email is fro@beam.dental. You can find Beam Dental on Twitter and LinkedIn, we hang out on LinkedIn a lot, actually since we’re working with employers, but we would love to chat anytime.

Alejandro: Amazing. Alex, thank you so much for being on the DealMakers show today.

Alex Frommeyer: Thanks so much. Thanks for having me.

* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at alejandro@pantheraadvisors.com.

How To Pause During An Investor Meeting

Alejandro Cremades Founder at acremades@gmail.com

2021-06-21

Learning how to pause during an investor meeting is one of the important skills for an entrepreneur. Whether it’s to regulate the pace of your pitch or to give yourself some much-needed breathing space.

The art of the pause is crucial to maintaining your flow in front of investors. There are many different types of pauses you can utilize throughout your investor meeting.

Knowing what you want to achieve by pausing is important to get the desired effect. In this article, we will identify some scenarios where a pause would be effective in leveling up your pitch. And teach you how to go about pausing.

For each desired outcome, there are slightly different ways to add a break to your pitch. By reading this, you’ll have the necessary arsenal of skills to learn how to pause during an investor meeting.

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The Ultimate Guide To Pitch Decks

Type 1: Pause for Effect

It’s almost a cliché at this point but pausing for effect still has some tangible merits in crafting an engaging investor pitch.  For pitches that focus on a story to tell, pauses can signify a “cause and effect” and can strengthen rhetorical questions.

“So, how did we solve that?“ or “What can be done?” are questions that shouldn’t be rushed. If your pitch is channeling melodrama, a pause for effect following a rhetorical question like “How could this possibly be fixed?” can do the trick.

Pairing this with a smile or smirk can really sell a light-hearted, tongue-in-cheek tone. This is perfect for casual pitches and can keep your potential investors on the edge of their seats.

What you do not want to do is jump from section to section. A pause at the end of a section of your presentation helps define a coherent structure to your pitch.

However, these types of pauses should only be used sparingly. Over-doing the pause for effect can make your pitch come across less as a professional presentation and more like a pantomime.

This type of break in the flow of a pitch can seem awkward and forced if not placed correctly in your script.

Timing is key to maximize effectiveness.

Great presenters use pauses to let a key phrase “hang in the air”. If you’ve got a profound message, you want to audibly highlight it, so it sticks in investors’ minds.

Rushing to the next paragraph or section will reduce the point’s punching impact. Therefore you could potentially lose your grip on your audience.
That’s where a pause for effect is most useful.

Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Type 2: Pause to Allow Understanding

Also known as a transition pause, a pause for reflection is a tool. It will help your investors to collect and gather the information provided to them in the preceding section of your presentation.

This is key to maintaining good pacing and ensuring your investors can understand your pitch. If you’ve just completed a meaty section with a lot of detail, allowing some time for investors to process the information is really important.

If no transition pauses are used, investors may miss the start of the subsequent section or may get frustrated with how fast you are going.

When you’ve got lines of texts or graphs on your pitch deck presentation, you must allow enough time for your audience to read what’s on the screen.

Moving on too fast can be annoying for potential investors and they could miss key data points about your start-up.

A lot of time and effort has been spent crafting this pitch deck. The last thing you want is poor pacing not giving your graphics the time to shine in front of your audience.

Keep in mind that whilst you are talking, investors’ eyes are on you and potentially not on your slideshow presentation at all. Allowing a couple of seconds for investors to turn away from you and check out your slide is really useful.

How long do you need to pause?

It depends on the amount of information that needs to be processed. If the pause is to read the slide behind you, time how long it would take you to read it and wait for that long.

It would be a great idea to practice your pitch with fresh eyes with partners or friends and see if they’re comfortable with your pace. What may be second nature to you may go over the head of someone new to your business and your presentation.

Get their feedback on how fast you’re going and adjust your pauses accordingly. To ensure your pauses for reflection and comprehension are adequate, you’ll also need to respond to how your investors are taking in the information.

If they’re taking notes, observe how long it takes them to finish a note following your first couple of transition pauses. If they are still jotting down by the time you move on to the next section, that’s a great indicator that your transition pauses are too short.

You might have to rethink how to pause during an investor meeting.

Type 3: Pause to Reset Pace

We get it, pitching to investors can be nerve-wracking. You can spend months preparing your pitch deck, ensuring your script is water-tight, designing your slides, and making sure it is perfect.

But, once the lights are on you, those nerves can easily derail your pitch. Perhaps you’ve started too fast, maybe you’re feeling flustered.

Investors can tell when someone’s pacing is off and when they’re nervous, but it’s so easy to slip into a panic. Your cadence can seem off, you can start missing points and going off-script. Disaster, right?

A bad start doesn’t have to spell doom for the rest of your presentation. Just take a deep breath and reset your pace.

If you feel yourself starting to panic, a couple of second’s break can kick you back onto the right track and help you regain your confidence. If you do this early enough on your presentation, your audience might not even have noticed your stage fright.

When we’re nervous, we tend to add filler words to our speech. This isn’t too bad in casual conversation as our friends and family can be quite forgiving to the occasional “um”, “uh” and “like”.

But when big bucks are on the line, investors are looking for entrepreneurs that are confident and sure of themselves.

These are key attributes to successful business owners. Overusing filler words can make you come across as inexperienced and may give the impression you don’t know enough about your start-up to pitch about it.

Whilst this may not be the case, allowing some breathing space to slow your speech down can help you sound a lot more confident and adept.

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Type 4: Pause for Comedic Effect

A great tool for setting the right tone for your pitch is the use of humor. A little comic relief can help lighten the mood and warm up investors to your personality and ideas.

The success of a pause for comedic effect is largely dependent on your natural charisma. Similarly, to the pause for effect, a comedic pause should be used sparingly as overdoing this can be quite awkward.

Unless you’re an experienced presenter, these types of pauses should always be planned. If you’ve got a concrete pitch script, you’ll want to plan some short pauses following jokes or one-liners to allow your investors to laugh.

A key tip for inserting jokes into your pitch is to test them on friends or partners before your presentation. It’s important to gauge whether your joke is actually funny. If your joke falls flat, a pause following is only going to exacerbate the awkwardness.

A pause for comedic effect coupled with the right facial expressions can be used to pass off an innuendo. If your pitch is light-hearted and playful and there are natural places to stick an innuendo, a pause for laughs can work wonders here.

It’s really important to know the tone of your pitch before turning to comic relief.

First of all, does your start-up fit the type of humor you’re looking to add?

For example, are you the founder of a medical company or pitching to provide humanitarian aid to the Middle East? Comic relief will come off as out-of-touch and crude.

However, if you’re a laid-back tech firm or a light-hearted lifestyle entertainment company, or a dating app, investors are much more likely to respond to a few jokes.

Secondly, know your audience. If you’re meeting angel investors, they tend to be more forgiving and may appreciate the break in seriousness.

Venture Capitalists and investment bankers tend to expect more discipline from their entrepreneurs. Comic relief may ruin your chances of being seen as a serious CEO. This is why you should know how to pause during an investor meeting.

Moderation is also key. Comedic pauses should be a tonal reset, not a memorable feature of your presentation.

Too many jokes and accompanying pauses can disrupt the flow of your pitch and be jarring. Placing these pauses at natural points in your pitch helps avoid any pacing issues whilst also acting as a transitional pause in its own right. Neat.

Learning how to pause is a critical part of how to improve storytelling in a pitch deck. Check out this video I have created where I explain how that’s done.

Type 5: Pause before answering questions

So, you’ve gotten through the meat of your pitch. You’ve paced the presentation well, managed your nerves, and even cracked a few jokes to make your potential investors at ease. Now, it’s Q&A time.

For founders without natural confidence and the ability to answer questions, this can be the most daunting part of the pitch.

Now without the safety crutch of a word-by-word script, this is where many begin to stutter and panic. But the question-and-answer section is also where potential investors are looking to test you the most.

To ensure you make a good impression, allowing a brief pause before beginning to answer a question put to you can help you really stand out.

The first reason for a pause before answering is to give you time to properly understand the question. You may know what you want to say before your investor has finished asking the question.

But don’t rush into an answer until you’ve had enough time to consider the entire question. You risk missing out on key information your investor wants to know. And, that’s why you should know how to pause during an investor meeting.

Perhaps it’s a double-pronged question. By not pausing, you could only be answering one-half of the question. The second reason for this type of pause is to allow you time to formulate the answer in your head.

A good rule of thumb?

Don’t begin saying your answer until you know how it’s going to end in your head. If you don’t pause to do this, you risk your answer turning into a nervous mess trickled with filler words.

This makes you come across as nervous, inexperienced, and unsure of yourself. These are attributes that investors do not want to see when looking for a start-up to take their money.

You may forgo a pause as you’re worried about running out of time. But, rushed answers tend to be less concise anyway. By allowing yourself to craft your answer before answering, you’ll end up wasting time through a jumbled answer.

Pausing will also help you to recall the correct information so your answers are accurate. If the answer needs – for example – turnover figures or demographics information.

Allowing some time before the question to remember this (or even check your preparation material to find it) makes sure you’re not giving investors inaccurate information. This is one of the nuances of how to pause during an investor meeeting.

The third reason to use a pause like this is that it projects confidence. You can see this in prolific speakers like Barack Obama utilizing this tool to regain control over a presentation or conversation.

Particularly if they pose a challenging question, a pause before the answer signifies to an investor that you’ve really thought about and engaged with the question.

Therefore, the perception of you is that you’re a measured speaker and sure of yourself. If you rushed into the answer, the perception would be that you were panicky and inexperienced – even if your answer wasn’t too bad.

Of course, as with all of these pause rules, there are caveats.

Whether you should pause depends on what type of question is being asked to you.

If it’s a simple question, perhaps a yes or no question, investors may question why it takes you so long to answer if you pause. Only use this type of pause for complex questions that will naturally need a lot of thought.

You’ll also need to watch out for the length of the pause. If it’s a few seconds, the pause is likely to have a net positive impact on your presentation.

However, extended pauses make you look slow and unintelligent. A good rule of thumb is to not wait for more than 5 or 6 seconds. Saying that, your perception of time is likely to be diluted when presenting.

So a better indicator of pause time is to answer when you’re confident you can finish the answer.

Conclusion

There you go, five types of pauses you should utilize in your investor pitch.  Don’t feel inclined to rush your investor meeting. Stick to your script, allow pauses and breaks, and take a deep breath if you find yourself panicking.

Make the effort to learn how to pause during an investor meeting. Take it slow and you’ll project the confidence you know you have deep inside. Good luck, entrepreneurs!

You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

 

He Grew Up In A Trailer Park And Now Raised $68 Million To Tackle A $3.5 Trillion Industry

Alejandro Cremades Founder at acremades@gmail.com

2021-06-20

Reichen Kuhl is an entrepreneur who seems to have a knack for turning challenges into big wins. He has already raised tens of millions of dollars to solve a problem facing millions of US households, that was born out of him being told “no.”

On the Dealmakers Podcast, Reichen Kuhl shared his journey into entrepreneurship, including participating in the Amazing Race. We talked about how getting denied for an apartment changed everything, proving your business idea, and finding a B2B angle for your product.

Listen to the full podcast episode and review the transcript here. 

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Driving Forces

Kuhl was born in Cincinnati, Ohio to a nurse and policeman. Though when his parents divorced when he was just five years old he ended up moving to a trailer park outside of Boston, Massachusetts.

He says that living in a trailer park wasn’t very popular at his school. On the bright side, that gave him a lot of time to focus on his studies and do well on his grades.

The one thing he knew is that he wanted to get out of that situation. He dreamed of owning a real home. To this day he is still driven to keep succeeding by never wanting to go back.

Applying himself to his studies got him into the US Air Force Academy with a congressional nomination from his senators.

His progression through the ranks of the Air Force helped him realize his dream of owning a real home. Though after nine years he found the military just wasn’t a personal fit for him.

The Amazing Race

Next Reichen found himself teaching high school physics and working as a flight instructor. However, one night at a bar in LA changed everything for him once again.

He was approached by someone casting for the TV show The Amazing Race. He and his partner went on the show, raced around the world, and won the $1M prize.

It definitely meant never having to worry about living in a trailer again. It also gave him a new career for a while. He appeared on The Drew Cary Show and Frazier. He has been in soap operas and hosted TV shows for the next nine years.

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Testing & Proving Your Business Idea

Reichen landed another TV show in New York. However, trying to move there brought a new challenge, and gave birth to his own startup venture.

Despite having been a TV personality and winning $1M on The Amazing Race, he couldn’t even rent a $3,000 a month apartment in NY.

They turned him away because his tax returns didn’t show he made 80x the monthly rent. They told him the building next door demanded he proves that he was making 120x the monthly rent.

That seemed crazy. Not to mention the fact that $3,000 doesn’t get you much on the NY real estate market, and if you are making a quarter or half million dollars a year, you probably want more than a $3,000 a month apartment.

This frustrated him so much that he decided to do something about it. His first move was to go back to school and study law. At the same time, he wanted to build a business around it.

Reichen started out thinking he would be happy if this side hustle brought him in an extra $15,000 while in law school. He believed that there were good renters out there who shouldn’t have to make 80x more than the rent to be able to get somewhere to live.

So he threw up a little website and called it LeaseLock. His pitch was that he offered to cosign on other people’s apartment applications and leases, providing his credit, if they would pay him.

He received hundreds of applications. Many from foreigners who may have good jobs or job prospects, but no US credit history.

Reichen Came Up With The Idea of LeaseLock

They would pay him 10% of the total lease amount upfront for his help. He picked 12 of them to start with. That meant cosigning for $400k worth of leases in just a week.

After the year was up he found no one defaulted on their leases, and the full $40,000 was his to keep.

So, he decided to double it to 25 people. Again, no one defaulted.

Ramping Up LeaseLock

He took his idea and proof to startup incubator Mucker Capital in LA. They introduced him to his now co-founder, Derek Merrill who he hit it off with immediately.

Together, with their complementary skill sets and the idea of turning this into an insurance company, they officially launched LeaseLock.

Derek brought his fundraising and marketing experience to the table. Reichen brought his experience in the space and legal knowledge.

With a premium put on the rent, renters can avoid having to pay a security deposit. Landlords of multifamily properties are able to be covered for damages or in the case of tenant defaults.

The real traction came when they found the B2B application for their product. By integrating with property managers’ software like Yardi, the process was streamlined and automated. LeaseLock bills property owners/managers for a low monthly premium based on the number of leased units on the platform, determined by these integrations. Properties are then insured for, typically, a 10x multiple of what the old security would have covered for unpaid rent and damage by defaulting renters. They can choose to have the tenant pay for it if they like.

When they did away with all of the usual exceptions and restrictions on making claims and integrated it into software, things just took off.

Reichen says that every one of their customers has experienced an increase in their NOI thanks to removing the need for security deposits and onerous application and qualification demands.

So far the company has raised $68 million from top-tier investors like Westerly Winds, Vertex US, Moderne Ventures, and Liberty Mutual Strategic Ventures.

Storytelling is everything which is something that Reichen Kuhl was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Listen in to the full podcast episode to find out more, including:

  • Creating insurance products for big industries
  • Raising capital
  • Building revenue with technology
  • Don’t ask, don’t tell
  • Reichen’s approach to interviewing recruits
  • The importance of authentic relationships
  • His top advice before starting a business

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Reichen Kuhl On Growing Up In A Trailer Park And Now Raising $68 Million To Tackle A $3.5 Trillion Industry

Alejandro Cremades Founder at acremades@gmail.com

2021-06-20

Reichen Kuhl is an entrepreneur who seems to have a knack for turning challenges into big wins. He has already raised tens of millions of dollars to solve a problem facing millions of US households, that was born out of him being told “no.” His company, LeaseLock has acquired funding from top-tier investors like Westerly Winds, Vertex US, Moderne Ventures, and Liberty Mutual Strategic Ventures.

In this episode, you will learn:

  • Creating insurance products for big industries
  • Raising capital
  • Building revenue with technology
  • Don’t ask, don’t tell
  • Reichen’s approach to interviewing recruits
  • The importance of authentic relationships
  • His top advice before starting a business

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

*FREE DOWNLOAD*

The Ultimate Guide To Pitch Decks

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Reichen Kuhl:

Reichen is a lawyer and a veteran, a graduate of the U.S. Air Force Academy (BS, Engineering), and served as a 2nd Lieutenant in Defense Contracting at the Satellite and Launch Control Sys Program Office, L.A. Air Force Base, CA. As 1st Lieutenant and Captain, Reichen served as USAF faculty at University of Virginia’s Air Science Dept.

Reichen holds FAA Commercial Pilot and Flight Instructor ratings. After 9 years Active, and 3 years of Reserve service–Reichen separated from the Air Force in 2001, founding Tribe Airways, a charter jet service brokerage based in Beverly Hills, CA operating at Van Nuys and Hawthorne airports.

In 2003, Reichen ran and won The Amazing Race-a CBS show/adventure race around the world, taking its $1M prize

Reichen is the author of the ‘Don’t Ask Don’t Tell’ subject book, “Here’s What We’ll Say” (Carroll&Graf 2006). He earned a J.D. from Loyola Law School alongside a clerkship in Aviation/Insurance Law and Personal Injury Law at the law firm of Girardi & Keese in Los Angeles, CA.

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  • Fundraising Process : get guidance from A to Z.
  • Materials : our team creates epic pitch decks and financial models
  • Investor Access : connect with the right investors for your business and close them

Book a Call

Connect with Reichen Kuhl:

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. What an incredible guest that we have today. The journey is remarkable. I think that you’re going to find it quite inspiring. But without further ado, let’s welcome our Reichen Kuhl today.

Reichen Kuhl: Thank you. It’s an honor to be here.

Alejandro: Reichen, I know that your upbringing was a bit shaky, to say the least, especially with the moving and ending up in a trailer park. Tell us about being born in Cincinnati, and then how was that shift and that transition into Northern Massachusetts?

Reichen Kuhl: Yeah, I was born in Cincinnati to a policeman and a nurse. They divorced when I was five. My mother remarried, and we moved up to the Boston, Massachusetts area when I was eight into a town called Norton, a smaller, maybe upper-middle-class town from my perspective because we lived in a trailer park. We didn’t have any money, so I saw a lot of things in that trailer park that really shaped my life and the way that I see the world. I think a lot of the people in the families who were in that trailer park were there for a reason because of personal choices, is what I mean. I saw a lot of drug addiction, alcohol abuse, family abuse, and physical abuse. One thing I knew is that I wanted to get out of there. I wasn’t a very popular kid because of the trailer park and because of my financial status, which seemed to be really important at this school. But I had a lot of time to study then, and I got great grades. I got myself into the U.S. Air Force Academy. I got the Congressional nomination from my senators, and I got in, and that’s where I went for four years. That was my escape from that trailer park, was getting into the Air Force Academy and joining the service.

Alejandro: Obviously, the trailer park has been and is a big driver for your success, something that keeps you moving always forward. So, for you, how has that experience shaped who you are today? How do you look at it, and how has it influenced you and fueled that ambition of looking ahead and putting a gap into whatever you’re seeing in the future?

Reichen Kuhl: When I got to the Air Force Academy and actually graduated from there, all I ever wanted was to live in a real house because I moved from a trailer park to a dorm, and I just wanted to live in a real house. That was my biggest dream. I rented my first house as a Second Lieutenant in the Air Force, and that was a big goal for me. But as I’ve gone on with my life, I’ve realized that I continue to run from that trailer park, and I continue to fear that I’m going to go back into that financial situation. It really drives me to do anything I can to succeed, and a lot of times, that means being smart, being entrepreneurial, finding ways to be self-sufficient and make money. I think at this point, I can safely say I’m not going to end up in a trailer park, but I swear I still think of life in those terms. It has driven me through school. It’s driven me through college, through law school, and definitely in my entrepreneurial life and all the activities I have done. I’ve failed a few times entrepreneurially. Now, I believe I have a hit here with LeaseLock.

Alejandro: Good stuff. In your case, you became an officer. That was nine years of your life that you spent serving. I understand that definitely one of the drivers that prompted the transition out of the army was what they call the Don’t Ask; Don’t Tell. What is this about?

Reichen Kuhl: Yes. I did get out of the military voluntarily when I was allowed to in 2001. I had spent nine years in the service. I got out as a conscientious objector to Don’t Ask; Don’t Tell because I realized while I was in the service, in the Air Force, that I was gay. I didn’t want to be gay. For many years, I think if I could have taken a pill to be straight, I would have paid any amount of money for that pill and taken it because I didn’t want that to be my life. It’s been a journey just to accept myself for who I am. One of the things in the Air Force that I realized is that I didn’t have the comradery that everyone else had because I couldn’t bring whoever I was dating to the Air Force picnic or the company picnic or to any outside events. I couldn’t talk about my private life, and I realized everybody is talking about their private life. They say your private life and your work life are separate. It’s not true. Your private life is very much a part of who you are, and I had to always be silent or lie about it, and it didn’t sit well with me, so I got out. I was one of many airmen and soldiers and sailors who left the military to escape that kind of thing. So I got out.

Alejandro: Got it. So getting out was part of that sequence of events that ended up incubating LeaseLock, but before we get into LeaseLock, when you were at a bar, there was an event that changed the course of everything, and that got you into TV, so what happened there?

Reichen Kuhl: Yeah. After I got out of the Air Force, I was teaching AP Physics at a high school, and I had taken a job as a flight instructor teaching people how to fly at a local airport in Hawthorne in Los Angeles. I was at a restaurant bar, and a guy walked up to me and said, “We’re casting for this show called The Amazing Race. You look athletic. Do you have a friend or a brother or father or someone that looks like you?” I said, “Yeah.” The guy that I was married to at the time, not a legal marriage, but we had ceremoniously married. We went and did the show together. This was in 2003, 18 years ago now. We ended up winning the whole race around the world and the million-dollar prize, which was exciting, and it set my life in a new direction because I started getting asked to do hosting and television shows. I ended up doing Frazier and The Drew Cary show. I went on soap operas. I took acting classes. I hosted a lot of shows. For nine years of my life, that’s what I did until I moved to New York in 2010. I moved there to do a play and another TV show. Thank God I did because that’s where I got denied for an apartment in New York City, and I got a chip on my shoulder about it. I got into the apartment with a cosigner, a friend of mine, but I got denied the apartment because I didn’t make 80 times the monthly rent the year before my tax return. That definitely changed my whole, as you know.

Alejandro: Why 80 times? Eighty times sounds ridiculous.

Reichen Kuhl: Yeah, and the leasing office said, “The building next door requires 120 times the monthly rent. So, we’re lenient.” But, no. This was like a $3,000 a month apartment, and I had to make $240,000 on my tax return the year before. I hadn’t made it.

Alejandro: Wow! Then, as they say, ideas are like busses. They pass, and then you’ve got to also get in, but as they say, too, they take time to incubate. So once you got that idea, one thing that you did as well is that you called your agent, and you told your agent that was it for you on TV. Then, you get this idea, and it seems more like a business-type of a path that you’re going to go after, but you went into law school. So why law school out of all things?

Reichen Kuhl: Yes. Getting denied for this apartment changed everything. I started researching all the risk instruments that were being used in multifamily to protect themselves from renters who might default on their rent or cause damage, which was what they were trying to protect themselves from with the 80x rent. I started using my brain again. I decided that I really wanted to use my brain. I always wanted to be a lawyer. I decided that the time was then. I was going to go back to law school, and I was going to get this business idea going. So to test my hypothesis that there was really good risk out there with renters that didn’t need to pay 80x monthly rent in New York, I put up a little website, and I called it LeaseLock because I had seen a LifeLock commercial, and I wanted a Lease name. I put on this website, “I’m a complete stranger, but I will cosign on your lease for you using my good credit if you pay me.” I got hundreds and hundreds of applications from people. I mostly helped people from foreign nations who had moved to the U.S. with great jobs or great prospects, and they didn’t have U.S. credit. They couldn’t get an apartment, so I said, “I’m a citizen here. Let me use my credit. I’m going to help you, a person from a foreign nation, get into your apartment. You have a great degree. You have savings. You have a family, and I know you’re going to be okay.” They would pay me upfront. I was charging 10% of the full lease value for the year, but they had to pay me upfront. I picked 12 people in my first run. I cosigned on $400,000 in leases in about a week, which was super scary because I didn’t have $400,000. I collected $40,000, 10%. It was the most money I’ve ever made in a week in my life, obviously. I would wait every month, and I would shift less of a brick every month that nobody defaulted. At the end of the 12 months, none of the 12 people I picked defaulted. They all were great.

Alejandro: Wow!

Reichen Kuhl: I got to keep the money, and I decided to do it again. The next time, I doubled the number to 24 people, and it worked. Again, nobody defaulted. My point was proven. There are really good risks out there. So I decided to take my idea to Mucker Capital out in Los Angeles because I had moved out there for law school. Mucker was the incubator that took me in. They liked my idea of no longer Reichen cosigning on apartments, but let’s turn this into an insurance company that can ensure the likes of big multifamily leasing corporations and makes it so they would no longer have to charge security deposits to people. What we’ll do is, we’ll charge a small premium to the property, and if a renter defaults on rent or causes damage, we’ll pay the bill. If the property wants to pass that cost onto the renter, they can through fees or whatever. We’re a B2B company, and we’re going to insure the landlord so that they stop harassing the renters like I was harassed. So there are no more cosigners, no more guarantors, no more shady bond companies. That’s how it went. Mucker introduced me to my now co-founder, Derek Merrill, who was already working in the insurance space and had a startup of his own that he was working on. He loved the idea. We met a couple of times, and we knew that we were going to be partners. It was great. We were a formidable duo. He knew everything about stuff I didn’t and vice versa. He knew about marketing and raising money. He taught me everything I knew about raising money in the capital markets. He was very attuned to engineering and operations. I was very attuned to the foundational parts of starting a company that he wasn’t: the legal work, the compliance work, how do we set up an insurance-type company, and what type of insurance company should it be? We built this while I was going through law school. Then after I graduated from law school, I was practicing law and moonlighting with LeaseLock and building it every day with Derek. Now, that’s the company we have today.

Alejandro: One thing that was a pivotal moment for you guys was the decision that you made to stop billing the renters. Why did you decide to do that, and what was the impact of doing so?

Reichen Kuhl: In LeaseLock 1.0, what we were doing was having the renters pay for the fee that would create the premium for the property. We got really smart and realized that all of these big properties that we were working with were using the same software systems to manage their rent and their occupancy. Those were Yardi, RealPage, MRI, and we realized that we could go ahead and charge the renters this deposit waiver fee using charge code billing. That’s when we no longer had to have leasing agents at leasing offices selling our product or even explaining what it was. Properties were so excited about it. They just made it automatic. They said, “We’re not going to even offer security deposits as a choice anymore. If a renter really wants to pay one, they can, but the default will be LeaseLock, where a renter fills out their application online, and as soon as they’re approved, whether they’re approved or conditionally approved, automatically charge code billing would kick in, and the renter would get charged the small fee every month on top of their rent. Then that fee would go to the property. The property would pay their premiums to us. We also did that with electronic billing. It was like a flywheel. Suddenly, we had an amazing product that was selling itself on its own. As soon as we signed up a property and flooded them into our API, that’s when we started going from tens of thousands of dollars to hundreds of thousands of dollars on a monthly basis.

Alejandro: For the listeners to really get it because there were multiple iterations, what ended up being the business model that we know as LeaseLock today?

Reichen Kuhl: Today, we’re on our fourth iteration. We call it LeaseLock 4.0. What that means is that in the past, the way that insurance has worked is that the policy itself—and this is even like your car insurance policy—the policy itself and the language inside that policy, meaning the restrictions and the conditions and the exclusions. Those carve-outs are driving what the loss ratio is going to be for the insurer. There are certain things you can claim and certain things you can’t and reasons you can claim them, and reasons that you can’t. Those are keeping losses down for the insurer so that they don’t have to pay out so many claims. What we’ve done at LeaseLock is we’ve taken our old policy, and we’ve completely wiped out all of those exclusions, all of those conditions, all of the deadlines for filing claims, basically, everything that was holding back the claims process in order to try to drive loss ratios down. We’ve gotten rid of all that, and now, the way that we’re controlling loss ratios is through artificial intelligence, AI. I know everyone is throwing around the word AI right now, and there’s not a lot of real AI out there, but I promise what we’ve built is a real AI risk engine that goes through 10,000 scenarios per night on every single account that we have learning and figuring out what the losses are going to be based on the losses of that day for that particular property and using that information, that data to change insurance rates and change what the coverage limits are going to be on the next run for that particular customer or property. We are a non-admitted insurance product. There’s an admitted and a non-admitted. Neither is more or less regulated than the other. It doesn’t mean a lot on the regulatory side. We’re a very highly regulated product and company. But non-admitted means you pay a separate surplus line tax on every LeaseLock we sell in order to have the freedom to change our rates and change our coverage and change our policy language without having to have that approved like a state regulator who has no idea what our business is. So we are by choice a non-admitted surplus lines product that pays big surplus lines taxes on everything we do but like that freedom. So what we are able to do with that freedom is use that AI risk engine to change rates and coverage, and that is what keeps our loss ratios down and low and keeps our reinsurance groups that reinsure our product happy.

Alejandro: Got it. I assume that building this and scaling up requires money, so how much capital have you guys raised to date?

Reichen Kuhl: We just closed a $52 million Series B. On top of that, another $10 million Series A, and then about $2 million before that. Together my partner and I have raised about $68 million.

Alejandro: In terms of size, to give an idea to the people that are listening, is there anything that you can disclose, like the number of employees or anything else?

Reichen Kuhl: We’re rapidly approaching probably about 85 employees right now, so we’re getting bigger. All of the teams are expanding, especially right now. Claims are expanding in a big way, claims operations, and claims handling, and a lot more engineers. When I talk about this AI risk engine that we’re continuing to build and optimize, that takes a lot of engineers, data scientists, actuaries, and people with that kind of expertise. The marketing department is growing, obviously, and then client success. That department is growing rapidly as well. Every department has to. Our legal team—we’re just a growing company that needs more and more people. But we’re getting to that sweet spot. I don’t think Derek and I want to have many more than 100 employees or 100 team members because we want to solve our problems with technology, solve our problems with data and be that kind of a company. Not that it just keeps growing with the number of employees but grows with better technology.

Alejandro: Absolutely. Right now, people talk about their success in terms of the number of employees or the amount of raise, but, ultimately, the ultimate metric is revenue per employee. I think the way that you’re thinking about optimizing and implementing technology is just fantastic. Imagine, Reichen, that you go to sleep tonight, and you wake up in a world where the vision of LeaseLock is fully realized. What does that world look like?

Reichen Kuhl: A world where LeaseLock is fully realized is where LeaseLock has fulfilled its mission to fundamentally change the way leasing is handled in multifamily rental units, where properties have the choice of using a security deposit if they want, but also have the choice of using this new lease insurance. Leas insurance is a name that we made up at LeaseLock and that we coined. To be able to use this lease insurance model in order to drive their bad debt down, increase their lease conversions on a day-by-day basis. Ultimately, because of all that, every property that uses LeaseLock has increased its NOI, Net Operating Income on an annual basis. That’s what rings true about our program. LeaseLock, if a property, any property, take what they’re doing now, gets rid of security deposits and plugins our AI risk engine, they’re guaranteed to increase their NOI on an annual basis. That’s meaningful, and that’s what our AI risk engine is geared to do. When you talk about what our product actually offers, it offers that value to a property operator. It increases the NOI at the end of the day, and that’s what everybody wants, and that’s what we’re trying to do for them. That’s the product we sell.

Alejandro: Very cool. One of the questions that I typically ask the guests that come on the show is if I gave you the opportunity to get into a time machine and we bring you back to that time where you were thinking about building something to address that issue that you had seen of being asked for 80x the amount of rent, and you had the opportunity of giving yourself one piece of business advice before launching the business, what would that be and why based on what you know now, Reichen.

Reichen Kuhl: It would be to think bigger earlier. I started this thinking I just wanted to start a little side hustle that would put an extra $15,000 in my pocket a year, but it was such a bigger idea than what I thought it was. I think a lot of entrepreneurs get an idea in their head, and they don’t give it enough credit or don’t give themselves enough credit to understand how big it could actually be. There’s a lot of money out there that’s ready to be invested in really good ideas and maybe even mediocre ideas that are being brought forth by very motivated people and motivated teams. I realized that I had realized that earlier and knew how big this was going to get and could have gotten probably even earlier if I had understood and had been thinking that big about the product.

Alejandro: And this is going to be the first time that I do it, and that is going to be two more bonus opportunities to be able to speak with your younger self. The one before building the business was the time where you were leaving the army, the military, and you were dealing with Don’t Ask; Don’t Tell. What would you tell that younger self that is looking to accept yourself the way that you are?

Reichen Kuhl: I was super scared when I got out because of Don’t Ask; Don’t Tell. I remember the last time I took my uniform off and knew that I didn’t have to put it back on ever to go back to work. I definitely broke down that night. I was super scared about where my life was going, but because I made a decision to honor myself and honor who I really am, things have worked out. It hasn’t always been easy, and it hasn’t been fast, but you’ve got to have authentic relationships. I didn’t have authentic relationships with my comrades in arms, so I wasn’t happy. I didn’t have authentic relationships in my Hollywood life. I feel like Hollywood intrinsically is a place where you always fake it till you make it, so the things you say and talk about, I don’t think, are authentic. But when I went to law school, and I had friends in law school, and I was happy to be back in class in my mid-to-late 30s and developing all these friends, those were authentic relationships. I was being me. I was doing what I wanted to be doing. And in LeaseLock, from meeting investors to building LeaseLock with my team, I’m always authentic with my team. They know who I am; they know where I come from; they know my insecurities. I am the kind of leader and founder that’s always worn everything on my sleeve. They know what my weaknesses are because I tell them, and I know what they are. So it’s all about authentic relationships, and that’s what I would tell my younger self to do and go to places where you have those kinds of relationships.

Alejandro: What about if we pull you earlier in time to that time where you were in the trailer park, and you were dealing with everything that was around you and perhaps with all the kids in school that were looking at you differently, for living in that trailer park. What would you tell that younger Reichen?

Reichen Kuhl: I thought I was one of them, but I had a little voice in the back of my head and maybe in my gut telling me this isn’t who I am. I can break out of this. I can get away from this. This isn’t what I’m supposed to be. I don’t know if I trusted that gut back then, but now I would tell my younger self, “Trust your gut; you’re right. Don’t fall into what these people are. Don’t make this your identity. Don’t think that you’ll never break out of it. Just trust your gut. Wow, do I use that at LeaseLock? I use it in hiring. I’m the last person that every hire at LeaseLock has an interview with. Everyone sends them to me because they want Reichen’s gut check. Even if I have no idea what it is that they do. If they’re a controller or an engineer or something and I don’t know the technical problem that they’re coming on to solve exactly or how they’re going to solve it. I know what they’re going to solve, but not how. I’m not as smart as they are in their particular category, but I always get a gut feeling about somebody just by interviewing them or by talking to them, even on Zoom. So I trust my gut, and I think everyone else at LeaseLock does too.

Alejandro: Just out of curiosity to expand on that, what is that process of listening and trusting your gut to make the right decision?

Reichen Kuhl: Be natural. When you’re in an interview process with someone, if you have a question that pops up in your head, or in your gut, or in your soul about what you want to know about them, just ask it because it’s better than asking a lot of interview questions that you find off the internet. Just let it flow. Ask them a few things about themselves, and then keep asking them questions that are interesting to you or that are interesting about them to you. Through that interaction, that’s where you’re going to get the real authentic feel for who somebody is.

Alejandro: That’s amazing. Reichen, for our listeners, what is the best way for them to reach out and say hi?

Reichen Kuhl: They can reach out and say hi by email. I’m available at reichen@leaselock.com. I get a lot of emails, but I’ll get to it eventually.

Alejandro: Amazing. Reichen, thank you so much for being on the DealMakers show today.

Reichen Kuhl: Thank you. Like I said, it’s an honor to be on here, and I’m happy to come back someday if you’ll have me.

* * *
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Tips On How To Pitch To Investors

Alejandro Cremades Founder at acremades@gmail.com

2021-06-19

What are the best tips on how to pitch to investors? For startups, raising capital is one of the most important aspects of your business survival.

Stepping in front of investors for your pitch can be nerve-wracking and difficult. Don’t fret. This article compiles a list of the best tips for entrepreneurs like you to follow to ensure your pitch lands with potential investors.

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The Ultimate Guide To Pitch Decks

1. Keep your presentation short and sweet

A good practice before preparing your pitch is key to successfully nail your ‘elevator pitch’. Condense all you need to say about your business into a thirty-second explanation e. It should be enough to pique the interest of an angel investor.

Whilst in most pitches you’ll have much longer than 30 seconds, building proficiency in concisely selling your start-up can help cut down your presentation time.

Making your presentation any longer than it needs to be risks losing your investors’ attention. Investors are busy people and the longer your presentation is, the less likely they are to pay attention or even stay to listen to what you have to say.

A good length is 10 to 20 minutes, and using the ‘elevator pitch’ model will help you say the key information without prolonging your presentation.

A concise presentation will allow more time for investors to ask you questions directly about your business. It will give you the opportunity to answer your investor’s specific worries and intrigues.

2. Know your financials

Investors are in it to make money and so they want to know your business financials and fundamentals. They want to know how much profit you turned over. How many sales you’ve seen in the last year and your realistic growth potential are other criteria they’ll have.

How much profit do you make per unit sold? What sort of increases do you expect in the following year? What is the business doing to ensure continued growth?

They’ll also want to know how you turned that profit. Knowing your business model through and through and being able to articulate it concisely is useful in convincing investors to splash their cash for your start-up.

If your business is turning a loss, you’ll need to polish up your speech on why this is the case. If an initial loss is an inherent part of your business model, you must explain how your business expects to turn that around.

And when you expect the startup to make money.

Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

3. Know your market

Investors are looking for CEOs that truly understand the sector they’re in as that’s a key indicator of whether a startup will succeed. Prove you’ve done the market research and know exactly who will buy your product.

Demonstrate the market need for your business, prove you’ve spoken to focus groups, and done the homework to know what you’re up against.

What market does your company serve? How big is that market? What sort of demographics affect who you can realistically expect to sell to?

How does your business model tailor to these potential customers? Do you expect the market to grow in the coming years?

Use these questions to gather together tips on how to pitch to investors. In your pitch you’ll want to address your TAM SAM and SOM:

  • TAM: What’s your total addressable market, everyone who could possibly buy your product?
  • SAM: How does that translate into your serviceable available market, how much of the TAM you can realistically reach in the long-term?
  • SOM: What’s the amount of the market you expect to be able to reach in the short-term, the Service Obtainable Market.

In-depth knowledge of the above metrics indicates a good understanding of your business’s position in the market.

4. Be honest about your competition

How is your business any different from the other businesses operating the market? This is an important question that must be answered if you have any chance of winning over investors.

The first step is to recognize and know who your competitors are and identify their key features and unique selling points. You’ve then got to demonstrate how your business compares to them. A great way of doing this is using a competition matrix.

This table should show how your business is similar to other competitors but how it has a strong advantage in some important selling points.

It’s best to know your competitor’s share of the market and more importantly, know how your business can expect to reach its heights.

Investors will appreciate the honesty here. Candid admissions about what your business will need to overcome to succeed are useful.

But don’t present any problem without following that up with your planned solution. This is one of the key tips on how to pitch to investors.

See How I Can Help You With Your Fundraising Efforts

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  • Investor Access : connect with the right investors for your business and close them

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5. Enter your pitch prepared

You must prepare your pitch beforehand. Even the most confident and charismatic presenters will need to spend time preparing their presentations before their investors arrive.

Come up with a good pitch script that has been rehearsed in front of an audience. Without a concrete structure, you risk your presentation unraveling into a mess.

Poorly planned pitches are often chaotic and lack the clarity and conciseness to wow investors. Spend some time to make sure your pitch deck looks professional and is pleasing to look at.

A well-designed pitch deck makes a good impression on investors. Spending the time to make sure the content is succinct will help your pitch land with your audience.

Gather the data you need to design useful graphs and present the key information visually. Investors have seen thousands of pitches and will instantly be able to recognize when someone hasn’t put the effort into preparing their pitch.

Polish your script and put in the hours to design a good pitch deck, the reward for your hard work will soon come.

6. Don’t read off your pitch deck

A phrase that has plagued presenters for years is the concept of “death by PowerPoint”. If you’ve ever had to sit through a presentation where the so-called speaker reads slides of text out loud for forty minutes, you know the dangers of death by PowerPoint.

Pitch decks shouldn’t be your script and you shouldn’t be reading off those slides. If you do this, your presentation will be dull and your investors will quickly lose interest.

If you stuff your pitch decks with text, you’re losing out on space for eye-catching graphics and useful data. Pitch deck slides should complement your pitch script, not replace it.

Crafting a sales script that uses your deck slides as a visual aid creates a much more engaging presentation. Add this factor to your list of tips on how to pitch to investors.

7. Focus on one product

Your business may have lots of extravagant plans for dozens of products and complete market domination. Whilst it’s great to have long-term ambitions and enter multiple markets, you usually don’t have enough time to cover more than one product in a pitch.

It’s extremely important to present your ‘core’ product to your investors. If you do win over investors and they decide to work with you, this should be the product they want to focus their money on to deliver to the market.

When presenting market data and competition information, this should relate to your core product. If your start-up is a service or tech company, focus on the key service you’re offering.

Whether this is the most popular service or the aspect of the business you believe has the great potential for growth, you’ve got to put forward the product most likely to earn your investors lots and lots of money.

8. Research your investors

If you know who you’ll be presenting to in advance, a great idea is to do your homework about them. You’re looking for what type of businesses they like to invest in and how involved they are in successful businesses.

Research the companies they’ve invested in previously and find out what has made them successful. You don’t want to be a carbon copy of the startups your investors are already working with.

But it would be a good idea to use what you’ve learned about your investors’ portfolio to tailor your presentation.

You’ll want to demonstrate how your business can succeed in a similar way and prove how your startup is stronger. In your research, you’ll want to find out key information to know whether they’re the right pick for you.

Investors can either take an active role in the businesses they invest in or are passive. Figure out whether you’re looking for an active or passive investor. And use this information when identifying tips on how to pitch to investors.

Does this particular investor usually limit who they give their money to? Perhaps they tend to only invest in a few industries/market sectors or perhaps limit their geographics.

Find out what their typical investing amount is and what stake they usually strive for. This will help you immensely with negotiating a better investment.

Even as you’re learning about the in-depth facets of creating a compelling presentation, you’ll need a comprehensive overview of how to proceed. Check out this video I have created explaining in detail how to create a pitch deck.

9. Don’t lie, be transparent

This is an important rule: be honest. When giving valuations, don’t inflate them to make your business seem larger than it actually is.

Make sure the sales figures you’re giving are accurate and make sure you’re honest about your business’s fundamentals. Don’t say you’ve got multiple high-street brands ready to stock your product if that’s not true, and certainly don’t lie about your product and what it can do.

Investors aren’t stupid and they can smell a liar from a mile away. These investors have seen hundreds or even thousands of businesses and can usually tell when something seems a little bit off.

They usually know where your business is likely to fail. Don’t forget, if your pitch is successful, they’ll be working with you and asking to see your business’s data.

Investors will quickly figure out whether you’ve been truthful with them, so there’s no point in being dishonest. Be transparent with investors. Present your profits in clear terms and metrics.

Metrics should be actionable and show how valuable your product is. These could be conversion rates, monthly recurring revenue gains, or daily active users.

In your pitch deck, make sure you’re using real numbers. Bad, dishonest graphs without scales or just plainly inaccurate information will seriously hurt your reputation and rapport with investors.

Remember, these people have seen plenty of pitch decks, and are looking for honest metrics in your visual data. This vague use of statistics will turn these investors away from your business, not convince them to part with their money.

If there are gaping holes in your business or if you need to identify weak spots, being honest about the steps you’re taking to remedy any bad aspects of your business is really helpful.

Investors will appreciate the honesty and may even be more willing to help you come up with solutions to where your startup currently falls short.

This may also help you come across as a hard-working and open-minded entrepreneur instead of an arrogant one.

Present an exit strategy

You must not forget the end goal of investors: to make money. Especially if you’re seeking large sums of capital, investors want to know how they’re going to get a return on the money you’re asking them to invest.

For anyone seeking venture capital funding or funds from angel investors, including a brief but clear exit strategy in your pitch is so critical. Here is a list of common exit strategies:

  • Acquisition: Have larger corporations already expressed interest in acquiring your firm? What sort of businesses might want to take over? Would this be beneficial to your investor?
  • Initial Public Offering: Can your business be tailored to the stock market? How is your business worth something to the public?
  • Revenue Sharing: VC investment could have a return through a share of the company’s revenue and profit

You want to build a case for a high ROI (return on investment). An exit strategy is a plan and the section on this doesn’t have to be detailed.

Anything could happen, but revealing you have a rough idea of where your startup could be headed can help win over investors.

Conclusion

Here are ten great tips on how to pitch to investors. Investors are looking for people passionate about what you do, so have fun selling your product and enjoy your pitch.

If you’re unsuccessful on your first few tries, don’t worry. Just take the feedback you’re given and slowly improve and craft your perfect pitch.

You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

Best Pitch Decks From Startups

Alejandro Cremades Founder at acremades@gmail.com

2021-06-18

Now that you’re ready to raise funding for your venture, it’s advisable to check the best pitch deck from startups. You’ll get some great ideas on how to proceed.

Raising money for a startup can be tough, it requires lots of dedication. Entrepreneurs have to network with the right group of investors, have several investor meetings, and most importantly, give a pitch.

Central to all the meetings with the investors is a pitch deck. The pitch deck has to follow specific rules and format to capture the venture capitalists’ interest and secure funding.

We shall follow some of the most successful pitches and explain what they did right so you can create your killer pitch deck. Great pitch decks allow companies to get big funding as they are rarely overlooked.

They follow an intelligent persuasion method that is almost artistic. Following the same formulae can get your business on its feet in no time.

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The Ultimate Guide To Pitch Decks

Tips For a Great Pitch Deck

Before we can list the best pitch decks, we have done thorough research to capture some of the common threads in successful pitch decks.

We have highlighted the juicy parts to inspire startups and entrepreneurs seeking funding. We dissected each pitch deck and found out that to create a successful one that gets the attention of venture capitalist, you have to:

Create a Story

Check the best pitch decks from startups and you’ll find that every investor is looking for a perfect story. They’re looking for a concept they can be part of.

Your work is to make your story more compelling. People with a similar idea may pitch the same investors or have pitched them recently with your idea.

What sets you apart? Make your story creative and compelling, and logical in response to the problem your business is solving.

Keep the story coherent and passionate as everyone wants to see that the founders are serious about solving the problem set before them.

The trick is to make the story relatable and timely to meet the current market forces and the narrative inexorable. Founders have to present the business as simply as possible, as if it was starting afresh.

Use data and a logical presentation to convince and convict the need to invest in the idea.

Have An Up To Date Pitch Deck

The market is ever-changing, and your pitch deck should evolve to meet market needs. The presentation should be dynamic and changing to show new business interests and marketing needs.

It should also be refreshed for every new audience as different investors will love to see different issues and questions answered in the pitch.

Numbers such as sales data, traction should be continually updated to reflect the most current data.

Outdated data may call into question the credibility of the team and risk funding. Let the content and the pitch deck look modern and refreshed throughout as the audience and the market evolve.

Just because the companies we cover have become great business successes doesn’t mean their initial pitch decks would get funded today.

Keep the Pitch Deck in Context

Context can make or create the pitch. When creating the pitch deck, try to evaluate the context in which the audience will read or listen.

How familiar are you with your product or company? Try to familiarize them with the technology in question.

However, if they already understand it, it’s better to avoid adding that in the slide. You can create different pitch decks for different audiences to entice and spark interest in the audience for more meetings.

Anticipate Questions

A successful pitch will raise a few questions. To ensure you are prepared for the pitch presentation, anticipate questions, and get answers ready in advance.

You can include some questions and answers in a FAQ page in your online data room too. That’s one of the key elements of the best pitch decks from startups.

Keep Them Polished and Professional

The content can lose its meaning to the venture capitalists if it’s not visually pleasing. You have to keep the content aesthetically pleasing to keep the audience glued to the pitch.

It is advisable to use the company’s theme colors to keep the pitch deck consistent and professional. The document should display the company’s branding and image.

Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

 

Best 10 Pitch Decks from Start-ups

Below are some of the most successful startups in terms of funding and traction. We will take apart the most successful pitches and draw some parallels.

1.Airbnb Pitch Deck

Airbnb is a web service that allows visitors visiting another nation or area a streamlined process to book rooms from the locals. The product makes it easy for renters to generate income and renters to get affordable rooms.

Airbnb Pitch deck is pretty straightforward in its message using 11 slides to create a visually appealing message. Its brevity means that it takes less than four minutes for investors to complete reading the pitch deck.

There is a clear product section with the product clearly explained without going overboard. Though the pitch deck is deliberate on what it wants to include, it could do with more slide categories.

There is missing information on why the product should be invested in at the moment. At least partially thanks to their deck, the good structure and great messaging, the company has raised over $4.4 billion.

2. Facebook Pitch Deck

Facebook is the most popular social media platform in the world, with over two billion users globally. It, however, began from humble beginnings as tailored to university student’s interests.

Their pitch deck is very effective in communicating the message to the investors. The slides define the product, effectively presenting the message to the investor and explaining the functionalities to the customers.

The transitions between the slides are properly spaced, which gives a natural pause between them. This gives investors time to prepare for the next topic.

The slides show the right amount of information, enough to decide but not too much to confuse the audience. Facebook, however, had too many slides on traction data and could have used the space for other slide categories.

They needed a team category to explain the team that was working on the product. The narrative is not well developed. Nonetheless, the pitch deck attracted a lot of investors, raising a funding of $1.3 billion before going public in 2012.

3. Coinbase Pitch Deck

Coinbase is a digital currency trading platform that makes it easy to exchange digital currencies such as Ethereum and Bitcoin.

The platform is so large that it earned a revenue of a billion dollars in 2020. You’ll want to examine one of these best pitch decks from startups for ideas.

Clear use of side labels with large fonts makes it easier for readers to understand topics discussed on each slide. The slide could have done better with a business model to understand how business works.

See How I Can Help You With Your Fundraising Efforts

  • Fundraising Process : get guidance from A to Z.
  • Materials : our team creates epic pitch decks and financial models
  • Investor Access : connect with the right investors for your business and close them

Book a Call

Also add a team slide to explain the kind of people charged with raising the business from ashes. A nice choice of traction figures such as signups and transaction values helps to market the business to its investor quickly as a valuable business.

It has a strong explanation of its industry in a context where cryptocurrencies were unknown and explains why it’s the best solution.

Coinbase had revenue of $1 billion in 2017 in addition to over $547.3 million in funding.

4. BuzzFeed Pitch Deck

Buzzfeed is a popular internet media and entertainment company that tracks news trends online. It is popular on most platforms, amassing a following of 17.2 million subscribers on Youtube.

The pitch deck is well delivered to grab the attention and bring the message home. There is sufficient information to describe the product with sufficient screenshots in the slideshow and other valid info like the revenue model.

The creators take sufficient time to give the narrative and traction of BuzzFeed’s current traction and where they are heading.

The competitive analysis is top-notch as the pitch does not try to concentrate on the difference between it and other advertising and media competition.

Still, it shows how it will fit to cross both media and advising. BuzzFeed was able to collect $496 million before its acquisition.

5. Pendo Pitch Deck

Pendo gives businesses an opportunity to study customer behavior on a website or mobile app. It can monitor page loads, clicks, focus, form submissions, and other stats.

These data can make it easy for businesses to make insights and make strategies to improve user engagements. The pitch deck is detailed and has the optimum number of slides and information online.

It is well designed with a good flowing theme. The team is featured to show the authority of the business. Visual appeal is maximized in the slide without compromising the content, as a single theme is used throughout the slide.

Graphs and charts quickly explain concepts and help bring investors on board. They managed to raise $108.3 million over seven funding rounds before acquisition.

6. Match Box (Tinder) Pitch Deck

There are many dating apps, but Tinder has taken over the market with gamification features that allow users to swipe left and right to express interest or pass on other users.

The app was initially called matchbox before it was rebranded to Tinder. Its pitch deck is simple and uses real-life situations that are relatable to the venture capitalists and investors.

The pitch deck subtly gives an idea of how the app can be used and clearly defines the monetization strategy and revenue model. The pitch deck has a clear problem and solution definition that makes it easy to create an overarching narrative.

Sparing use of screenshots does not obscure the message, but yet it easily grabs investor’s attention.

It is a bit lengthy but they’ve managed to receive investments of $1.4 million. That makes it one of the best pitch decks from startups that every entrepreneur should learn from.

7. Castle’s pitch deck

Castle is a niche market real estate solution for rental property owners. It has a good slogan, Put Your Properties On Autopilot!. It is meant to reduce the hassle of being a landlord. Though the business targets a niche market, it has a great pitch deck.

It weaves a clear and cohesive narrative that can persuade anyone to support the business. The pitch deck is well-themed with a good visual appeal; it has clear info that gives sufficient information per slide.

Its visual appeal reduces any barriers to the slide’s comprehension. Individual bios and Linkedin profiles can be incorporated to improve the team slide.

There is also a need to explain why the idea is ideal at the moment. But its $3.3 million in investor funding is a testament to its great pitch delivery.

While checking top pitches is a good starting point, you’ll need some additional ideas on how to write a pitch deck. Check out this video I have put together explaining in detail how to successfully execute the perfect pitch.

8. Linkedin Pitch deck

Linkedin is the largest online professional social network with millions of users globally. It helps professionals connect and extend their networks in the online space.

The pitch deck idea is one of the greatest, with a streamlined message and theme. The pitch deck does a good job of explaining how the internet works and predicts patterns and trends.

That’s how it makes it clear to venture capitalists how the business venture will survive in the new online space. The projections are so great that they were outpaced by the actual growth of the firm, which helped the investors have more confidence in the venture.

The revenue model is well defined, but like most other pitches, it would be great to add a slide on its team.

9. Transferwise (Wise) Pitch deck

Transferwise is one of the most extensive peer-to-peer money transfer services that work across the globe. Its services are available in all but seven countries and territories.

The pitch deck has clear slide labels making it easy for the reader to understand what information each slide is trying to convey. Bright yellow transitions are very clear and easy to understand for any eye.

A good balance of words and aesthetics helps to enhance the message and convey information to their business. It is easier to read.

The deck was great but would have been perfect if it included an appendix that could answer any question that lingers in the venture capitalists mind.

The slides could do better to highlight the competition and explain the market size. This pitch deck attracted $1.3 million.

Study it as one of the best pitch decks from startups that highlight what not to do.

10. TeaLet Pitch Deck

Tea is one of the most popular commodities in the world despite that the market is filled with middlemen who make it difficult for farmers and consumers to purchase quality tea.

The business uses blockchain technology to connect wholesale buyers and retailers. The business helps farmers get profits, and consumers get premium tea.

The pitch deck has lots of stats, data and traction statements that capture attention and emotion at the beginning. The problem and solution are well developed as well as the revenue model.

There is enough emphasis on the why and what. It is well-designed with good themes to create good messaging. There is a perfect mix of images and words to hammer the message home.

The team slide could however be improved further to explain the team’s credentials or link it to the LinkedIn profiles. It’s another of the best pitch deck from startups you would want to learn from.

Conclusion

These ten pitch decks have driven the message home and grabbed the attention of the venture capitalists. They have many aspects that any startup can learn from and use to raise millions of dollars.

Just make sure yours is modernized to what investors want now. Start somewhere and create a world-class pitch deck from this inspiration.

You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.

John Doe Founder at alejandrocremades.com

February 3rd, 2020

Hi Ivana!

That's an amazing stage to be at. You've done well and now you can shine!

Advisors have to love your project as much as you do, but also give doses of reality when needed. You want someone who isn't too passive but also someone who can give you a kick in the tail when you need it.

In regards to compensation, it really depends on what they are bringing to the table: Wisdom, connections, investors, etc. all have differing value sets and the more you cut into the pie, the less you will have to give later. I'd start with your team deciding how much you are allocating for future investors, founders shares, and for advisors I usually have seen 10% of the total pie allocated to be divided between your core advisor panel.

Last bit of advice, don't just go for a profile, go for passion and an advisor who can contribute. There's a lot of companies that have rock star advisors, but high profile doesn't mean it'll be best for your company.

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