In the times of patented ideas and inventions, coming up with a unique business plan can be difficult. Sure, a new idea might not turn out to be the next Uber but if it is something you believe will work, a new book that offers tips on how to convince investors to support an idea might help.
In Innovation Capital: How to Compete And Win Like The World’s Most Innovative Leaders, Jeff Dyer, Nathan Furr and Curtis Lefrandt highlight the mistakes made by innovators while pitching ideas to potential investors and provide ways to avoid or overcome such mistakes. Here are some of the tips.
Setting a base to explain the key to achieving success in any entrepreneurial venture, the authors write, “There are two primary categories of amplifier actions: (1) those that strengthen your human, social and reputation capital… and (2) those less focussed on amplifying who you are and more targeted at persuading others to provide support for a specific idea or project.”
The authors use the phrase “Personal Impressions Amplifiers” to refer to actions that make the innovator be deemed credible and help them win the financial backing they require. The authors state that assessing one’s strengths before beginning the process of pitching their idea is vital. Introspection will lead to the innovator being able to realize their strengths and using them at the right time.
Using relevant analogies
During the process of explaining one’s idea to investors, the authors urge innovators to use relevant analogies and comparisons.
“Comparisons work best when you use analogies that are familiar and make intuitive sense…comparisons can strengthen your idea’s or product’s impression with potential supporters.”
The innovator must remember that while their idea seems clear to them, it is important to explain them as much as possible to potential investors.
Creating visual representation
Creating a visual representation of the idea or “materializing” it can help an entrepreneur to pitch an idea successfully. It involves making the idea visible and thus easy to understand. As the authors write, “Every step you take to create a more observable, believable solution can increase your ability to win resources and support for your idea.”
Commitment and credibility
While delivering an idea to potential investors, generate signals to investors and make them aware of the time and effort you are willing to devote to the idea.
The authors advise, “Don’t make a credible commitment until you have the resources you need committed as well. Always think of a plan B in case things don’t work as expected.”
Fear Of Missing Out (FOMO)
FOMO revolves around painting a halo of exclusivity around the innovation or idea. Creating a sense of urgency “that if you don’t act quickly, you might miss out on the opportunity” is important to accelerate the process of finding potential investors and successfully getting them to invest in one’s business endeavour.
“FOMO isn’t high pressure sales to do something unethical or a fraudulent show of scarcity…FOMO is about helping supporters overcome their natural inertia and scepticism and see the value of opportunity.”