Startup Playbook: Pitching Investors

Mursal clearly has a vision for what Chatterbox is and what it can be, and robust reasoning for why it should exist in the world. And yet, when she was working on this idea in the graduate program, not everyone around her saw the value in what she was creating.

At the end of the postgraduate program where I had the idea for Chatterbox, there's this crowdfunding platform that you have to apply to get access to. And 5 out of 10 companies got through, and Chatterbox wasn't one of them. And the feedback was that this is never gonna work. Like, there isn't enough supply of highly skilled refugee labor to fulfill this. And obviously, that's the general— that was the general understanding in society that prevented them from finding work in the first place. And it's Chatterbox's job

Mursal takes that seriously. That is, the idea that it's her job to prove naysayers wrong. That helps motivate her.

I use that as a fuel to carry on. Like, I love when people undermine and underestimate me. It just— it puts wood on the fire and pushes me forward. So that's always been the way I've taken that kind of disbelief or critique.

The rejections Mursal faced early on with Chatterbox helped her develop the skills to keep pushing forward, even in the face of people telling her that her idea wouldn't work. To convince people otherwise, it was out of necessity that Mursal had to hone her pitch. She had to perfect the words she used when describing Chatterbox to others. So what does a good pitch sound like? The CEO of All Turtles, Phil Libin, has a very basic set of questions that he says all founders should address in their pitch. Those questions are, why this? Why you? And why now? Why this meaning why this product? Why is this the thing you're working on? Why you as in why are you the best person to be building this product? And why now? Why is now the perfect time to invest in what you're doing? Here's how Mursal answers all 3 of those questions in her pitch. Which, by the way, I asked her to explicitly signpost when she's answering each of the 3 questions, but she wouldn't normally say out loud, why this, why you, why now? But here's her pitch.

Why this? Because 40% of employers around the world say that they can't find the skills and the labor that they need to fill positions. And yet we have millions of highly skilled and unemployed people who are refugees currently with no access to these jobs and no access to these, to even hear about or apply for these kinds of opportunities. And it's going to become a growing problem. You know, 1 billion people potentially affected by displacement because of climate change who will become dislocated from the labor market. This is an important issue socially and a huge economic opportunity. And This is why it has to happen now. So why now? Because we're at an era-defining sort of time, and with an era-defining social issue. The mass displacement of human beings is something that we really need to get to grips with. And rather than seeing this as a problem, what Chatterbox helps to do is to reveal it as an opportunity for companies and society to benefit from the immense skills and talent that exists in the refugee community. So why us? I come from a refugee background from Afghanistan. My family fled that country in the early '90s, and I feel like I understand the experience of refugees and the troubles that they have trying to reintegrate into the labor market because it's something my parents and extended family faced. And my co-founder, Guimet, is a serial tech entrepreneur. Her last company was backed by Y Combinator and is a growing global digital platform, and we have the fortunate ability to benefit from her experience as a co-founder. So I think the tech entrepreneur experience and my background as a refugee really puts us in a great position to solve problems for the refugee community using technology.

Now that's a pitch. But even with this refined pitch and the clear answers to why this, why you, and why now, Mursal still faces her fair share of rejection.

I mean, I get rejected on a weekly basis. Funders, clients. Being an entrepreneur is like a constant state of rejection, but also hopefully some successes. And you use the rejections to learn and to motivate and fuel your work, and you use the successes to equally learn and motivate and fuel your work. And you shouldn't be just discouraged because you were rejected.

But the honest truth is, sometimes you will feel discouraged because you were rejected. That's natural, and that can be difficult.

I think it's been hard because it's my first time. I think the first time is hard. I think it gets easier. And actually, having spoken to some of my mentors, including Manolo from All Turtles, like, I, I literally had a dog walk and coffee with him, and he said, You know, the first time he fundraised for one of his startups, he had the same experience that I did, this kind of insecurity in the face of more experienced and richer investors, and, you know, feeling like you owed them something rather than the other way around. And, you know, by the time it was his third round, raising his third round of investment, he just had a completely different attitude. You know, if they couldn't make a decision, that meeting, whether they wanted to invest or not, then he just didn't speak with them again. I don't know how much of that is the fact that Manolo is a pretty awesome guy and respected businessperson, and that he can turn away people's money much more easily than maybe someone earlier in their career. But I guess it kind of rings true. I think when you get to know investors, as I've gotten to know people like Phil and some of our other investors, you realize that You know, they have just maybe a similar level of anxiety and desire to make a good impression and to try to understand the core of a business as you do, and that helps.

Manolo Espinoza, who is the Vice President of AllTurtles, helped Mursal gain some perspective. These kinds of conversations with mentors are so important in the process of pitching because they help you stay grounded in what can be a trying time. To that end, Mursal wanted to also speak to another person who's given her great advice throughout Chatterbox's development, Phil Libin, Alt.Turtle's CEO.

Phil, thank you so much for taking the time. I really appreciate it. And I have a few questions I want to ask you about raising investment, if that's okay.

Yeah, thanks for, thanks for asking.

Okay, so I guess one of the things that I've heard you talk about before and that I, as a first-time entrepreneur raising first round of financing, it's hard for me to wrap my head around.

Mm-hmm.

Is the concept that we're doing investors a favor and they're not doing us a favor. Because when you're sitting on this side of the table, definitely it feels like you are in the position of less power, that the other person holds all the cards, and that they're always the ones asking the questions. And you feel quite vulnerable opening yourself and your organization up to those kind of questions and challenges. But you often say that, well, you adamantly say that this is incorrect.

Yeah, I think that's important to understand. Any good deal, especially an investment, isn't either side doing anyone else a favor. It's a fair deal. People aren't giving you money. They are buying a share of your company, and they're doing it for a price and on terms that both of you think is okay. you're doing them a favor by letting them in, and certainly as much, if not more, than they are by investing in you. You have to believe in them just like they believe in you. But yeah, there's definitely the perceived power imbalance. And I think a lot of investors play on that because investors, especially around here, tend to be a little bit older than the entrepreneurs, a little bit more experienced. They have more money, especially if founders are women or underrepresented minorities, maybe a different power dynamic. So yeah, I think it's easier for investors to kind of pretend to have the advantage, but you don't need to believe that they do.

I guess I'm still in this position where I know that's true and I hear you, but it doesn't feel true. Like, it's still every meeting I come to, I often feel like I'm on the weaker side of the table. So what can I do practically to change that?

I mean, there's always the kind of— it's a good question.

Thank you.

Like, I think investors don't actually want to invest in things where it feels like they're doing the founder a favor, right? They actually want to feel, because they're so motivated by FOMO, by fear of missing out, they actually want to feel like, oh, they really got to get in here before someone else does. So you're actually not helping your case by feeling or acting or signaling that you somehow think that they are in the superior position. The good deals that happen happen when investors think that, yeah, they're actually lucky to be able to get in. So a lot of it is psychology, and I don't think there's any tricks to it. I think you just have to— step one is understand that that's the truth. They're not actually doing you a favor. And then step 2, just believe that. But it's true, so it should be easy to believe. You're not trying to trick yourself. You're just trying to actually believe what the truth is. And then Once you do that, you can act that way, you can externalize that.

So this kind of— there are loads of articles about investor psychology and how to game the system, right? It's commonly understood that there is this feeling amongst entrepreneurs that they have to work hard to get investment and also work the investors to get investment. What do you think about this? I guess it's a form of manipulation, is it? Or you mentioned that you think that there is a level of creating this feeling of FOMO. Would you call that— is that directed? Should that be directed, or should that just come naturally?

You're really looking for someone who wants to help you build a thing. This is not a trade. And what they're motivated by is just wanting to be part of the mission. Most investors are— most sort of VCs are— they've got too much going on. They don't have the experience of actually running companies. They don't want to focus on just one thing, but they want to kind of live vicariously through your journey. They want to be excited about being part of the mission that you're on and basically feel like they get to be part of this, almost like they get to be co-founders. If you're talking to someone about being an actual co-founder in the company, it's not like anyone's doing anyone else a favor, right? You're evaluating whether there's a good fit. And it's kind of a similar thing with early-stage investors. So I think the most important thing is just to have, just like you would with a co-founder, you want to have extreme clarity yourself about what are you doing and why.

Mm-hmm.

Make sure there's no ambiguity in your own mind about what journey you're actually on. And then once you have that clarity yourself, you just want to communicate it as clearly as possible. And the investors that you get are going to be the ones that really like that journey and understand it and want to be part of it. And I don't think there's any trick to it.

That was an amazing analogy. That was seriously good. No, seriously, I think it illustrated a lot of the things that you've been telling me. This is not about hoodwicking someone into making a decision. This is about being clear and practically honest about your proposition, but saying it in a way that hopefully gets people pumped about joining you.

Yeah, I think that's right. And I think the other thing that is difficult, I think, for a founder to kind of really wrap their head around, but it's important to understand, is it almost doesn't matter how many investors say no. It matters a little bit, but really only around the edges. What really matters is that at least one says yes. So your job isn't really to convince anyone. It's not really to change anyone's mind. It's just to find people who are predisposed to saying yes to your story and to you, and then just get them to yes. And if you get 100 nos first, as long as you can survive long enough, it doesn't matter if 100 people have said no, because you don't need 100. But that's psychologically tough. Tough for me too, when I'm raising money and I get told no a lot. Intellectually, I know that it doesn't matter. But the psychology is always hard, but you just have to kind of keep that in mind.

So zooming in, let's imagine I'm entering into a meeting with an investor. I sit down in front of them. What does an ideal pitching scenario look like?

I mean, I guess this probably differs for different people. I tend to get disheartened if someone is asking me very generic questions. Like, if I'm getting questions that are they just feel generic, like they're the same questions that they would ask kind of anyone, then it feels to me like they don't really— they're not excited enough to kind of understand what the important questions are. And if I'm getting questions, on the other hand, that are actually difficult for me to answer because they're important questions, then that's a really good sign that someone is kind of engaged with this intellectually. And so there's a number of these very generic questions, which sometimes you'll get asked because people think that it's just their job to ask the questions, but usually you can you can kind of brush past them pretty quickly. And it's stuff like, what's the total market size? Who's the competition? Just the kind of crap that you would ask kind of any company. If, on the other hand, they're asking questions that are uniquely specific about what you do, that actually shows some level of understanding and engagement, then that's a pretty good sign.

What are the differences, say, between US investors and European investors that people should pay attention to?

There's kind of a lot of stereotypes about it, which are partially true. And it's not really US versus European. It's really like Silicon Valley versus most of the rest of the world. So VCs in Silicon Valley tend to be more concerned with how big something could be, with the scale, less concerned about how quickly it could become profitable, more willing to invest larger amounts of money for longer periods of time without asking for profitability. If that means you can get much faster growth. So the canonical Silicon Valley investor cares more about fast growth than profitability, whereas many people in other parts of the world are more traditional and they kind of want to see, okay, well, when do they get paid back? When do you start making money? That sort of thing.

I'm so sad that we only got to scratch a little bit of that, but—

That was really fun. Thanks for asking.

Thank you. Thank you so much for your time.

My pleasure.

So, Mursal, how did that conversation go for you?

Whenever I talk to Phil, I feel like he presents things in this kind of clear and obvious way. It doesn't feel like that when you are earlier on in your career as an entrepreneur, or if you haven't been an investor before. So I feel like potentially it is really helpful to have these conversations and to hear things from the other side and to To get that perspective that sometimes people can lack.

That perspective helped Mursal see things a little differently, but there are plenty of lessons that Mursal has had to learn through her own experience. One of the biggest lessons Mursal said she learned relates to her identity.

Definitely learnt why people say things are different when you're raising as a female person rather than a male person. A piece of advice that was offered to me by a very experienced female private equity investor who's spoken with a lot of women in particular about their experiences with raising investment. Her advice was, smile less, wear your hair back, and lower the tone of your voice. So I think that should give an indication of the difference that there is between raising as a male and a female.

That says a lot about the difference in experience that women can have when they walk into a pitch meeting as compared to men. Even so, Mursal and her co-founder were persistent in their work. They knew that Chatterbox was a good, useful product, and that they were unique.

The one thing I think that distinguished Chatterbox from other companies looking at these problems isn't just that I understand refugees' experiences, but when you actually come from the background, I knew no one was gonna work as hard as me to find the solution. And in the beginning, genuinely, the first opportunity I had to get funding, Someone refused me because they said the idea would never work, and it probably wouldn't have, but it was the persistence and the belief in the desire to want to find a solution that got us to where we are now. Which actually, when I look around, I'm like, oh shit, damn, like 2 years and look where we are. Like, it's been a journey and a half. But yeah, hard work and understanding the problem, 2 of the vital ingredients to a semi-successful early-stage startup.

That is great advice, but truth be told, advice can only take you so far.

At the end of the day, there are just some things that you cannot learn through a textbook or through conversations with people. You just have to do it. And if you work extremely hard and learn quickly, then you'll make it a success. Even if you fail, you'll still have learned from the experience. And I think raising investment is one of those situations where You can sit till the cows come home listening to different perspectives of how to approach investors, how to pitch them, the temperature of the room it should be for you to have a successful pitch, what drinks to make them. And it would just be a waste of time because what you should really be doing is looking at your metrics and trying to improve your sales, because that's the thing that's going to make a big difference.

So to all 3 of our listeners who are founders, turn off this podcast.

Yes.

And just go out there and pitch.

Exactly. Exactly, Marie. Spot on. That's the best advice we've heard all show.

So not great for our podcast numbers, but great for your own personal metrics.

Yeah. Turn off this podcast, go onto Google Analytics or whatever tracking system that you have, and make those numbers grow.

You heard her. Go make your product and your pitch the best it can be. This podcast is a production of the All Turtles Worldwide Media Empire. We recorded this episode in Donatello Studios in San Francisco, California. If you have any questions, comments, or suggestions, send us an email at hello@all-turtles.com. I read every message. This episode was produced by me, Marie McCoy Thompson. Thanks to Jim Metzendorf for editing this episode, Chris Ploeg for his audio expertise, Ali Packard for our artwork, and Matt Amerman for our theme music. On behalf of Phil Libin, Mursal, and Chatterbox, and the rest of the All Turtles team, thanks for listening. Thanks for listening.