Business, Destination Edition As Seen On TV
By: Kevin Harrington • 3 years ago •
In the early 80’s, I was watching Channel 30, the Discovery Channel and I noticed that there were no programs in the early hours of the morning. The Discovery Channel was a nationwide channel shown in more than 200 cities around the country.
I rang Discovery the next day to find out why it was broken. They said they ran their program, which was six hours, three times a day, giving a total of 18 hours of viewing. They had no desire to show programs for the other six hours.
With just $25k capital, I bought that space and created the very first infomercial. This was a commercial that was 30 minutes long and many thought it wouldn’t work.
So, from 3 AM till 9 AM, my infomercial played on the Discovery Channel and we made $28 million in sales in the first three years.
On the success of this program, we bought time on a bunch of other channels including Rupert Murdoch’s Sky channel in the UK, Sweden, Holland and Australia.
While my initial investment was just $25,000, I needed to raise more funds publicly. Raising money in the beginning was very difficult because I was in my 20s and the banks just laughed at me.
When they saw I had made more than 50 million in sales and had created a dream team, they took me more seriously.
My dream team included a past bank president who spoke the language of banks and make pitching much easier to that audience.
There have been many changes in the financial world since then. Banks will only loan against assets but today, crowdfunding and Shark Tanks have created other funding sources. There is also Regulation A+ (Reg A+), which is a mini IPO, selling equity on the Internet to small investors.
The idea of selling stock on the Internet allows small and one-time investors to get a share in a growing company. I’ve personally raised $9 million in one deal which would not have been possible under the banking model, including $100 investors.
There are a lot of companies doing creative IPO deals these days. We’re doing plenty of these types of deals but there are many people doing it foolishly and I predict that there will be repercussions. I think in the future, they will tighten up regulation in the Reg A+ space.
One company I dealt with raised $400,000 on Kickstarter which generated 2,000 sales.
Unfortunately, they spent the raised money foolishly and I had to bail them out to fulfil their orders. As you can probably guess, I didn’t do it for free.
If you’re looking for funding, I always say you should start close to home. Start with friends, family and even suppliers. We recently raised $28 million by talking to suppliers who had a vested interest in the company’s ongoing success.
Beyond the ‘close to home’ would be Reg A+ or equity crowdfunding. This is trending very high in the US at the moment.
Either way you need to be good at pitching and for me, the three top tips for a perfect pitch involve the Tease, Please and Seize.
You start out by teasing your potential investor with the problem. This is where you set the hook, planting the seed to get the investors’ attention.
The better you can show the problem, the easier the rest of your presentation will be.
Don’t forget to demonstrate all functionality if you can but a trick is to leave something as a surprise, so that you can show extra value. This is the “but wait there’s more”.
Where possible, get testimonials from consumers, professionals or celebrities. If you have scientific results, show them but make sure your claims are justified and where possible use numbers to show you know your content.
Make sure you have done your research and competitive analysis. Any investor will want to know the facts, figures and statistics of your product and the competition.
One of the most important elements is your team. This shows that you are not on your own, and gives the investor confidence that you can deliver on your promises. A well-defined operations team must be either planned or in place to take care of the solution.
Know why you need the money. While this might sound self-explanatory, an investor will want to know what you’re going to do with the money should they choose to invest.
How are going to generate the buzz around your product?
WHAT’S YOUR IDEA WORTH?
A well thought out marketing plan will not cover all the possibilities but will show that you’ve thought about it.
Investors usually know that projections are guesses at best.
A planned marketing campaign should address as much change as possible.
After you present your case, it is time to seize the deal. Ask for what you want, present the final call for action and expect the response.
If the investor says no, at least you have practiced your pitch and got the message out there.
Many deals have occurred because people watching the shark tank saw the sharks miss an opportunity.
The more you practice, the more authentic you will become.
Remember it’s up to you, so go out there and make it happen.
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