CFOs have a key role to play in raising money for organizations, and the most effective way to do that is by telling the right story to the right group of investors, according to experts.
“Raising capital is about storytelling,” Michael Bayer, CFO of data storage company Wasabi, told CFO Brew. “Ultimately, you don’t raise capital; investors don’t give you capital. Investors rent capital to organizations, to firms, and ultimately they’re looking for a reasonable risk-adjusted return on their capital, and then they want their capital back.”
CFO Brew spoke with finance leaders about their secrets to successfully courting investors, who told us it’s clear there’s no one-size-fits-all approach to making a pitch. It requires teamwork, flexibility, and—something that rang universally true among them—good storytelling skills.
Play to your strengths. CFOs modify their message depending on the audience, and emphasize what makes their company unique to make successful sales pitches.
Wassia Kamon, CFO of nonprofit commercial lender Access to Capital for Entrepreneurs (ACE) and a keynote speaker, said a key to understanding what they want to hear is to first listen and understand them.
“If you don’t spend time understanding your audience and listening to what they actually need, you will not be able to adapt effectively,” Kamon told CFO Brew. “You’ll be able to change, but it doesn’t mean that you would change [in] the right direction.”
For example, Kamon said her organization receives funding both from other capital lenders and donations. “You do have to adapt” the story to these different audiences, she said, “because they do want to see different things.”
For Anna Brunelle, CFO of autonomous vehicle (AV) company May Mobility, the company’s technology does the heavy lifting in her pitches to investors.
“We have this different technology, and we’re attracting investment at a time when other AV companies have been announcing investors backing away from the technology or shuttering their doors,” she told CFO Brew this spring. “And I think, truly, the technology is the reason for that differentiation.”
Brunelle’s ability to secure investment is vital for May Mobility, she said.
“The biggest part of my role is to ensure that there’s fundraising there to support the company as it grows, and to ensure that we can continue to operate,” Brunelle said. “ But it’s also really about growth and execution, and that means it’s also about creating partnerships that help us to grow, and understanding how autonomous solutions can benefit other parties.”
Wasabi’s Bayer said that CFOs typically speak with investors with a range of expertise. They could be highly involved in the specific industry the CFO is in, or they could be generalists.
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“I’ve got to quickly assess, is this person [an] expert in my tech and I can go deep with them, or are they a generalist? And I have to paint our company in the mosaic of what they understand about the technology world,” he said. “I always believe it’s important to meet the audience where they are.”
Go team! Of course, the CFO is just one of several key contributors to an organization’s fundraising efforts.
As CFO of numerous private and public companies, Bayer told us he’s helped raise nearly $1.2 billion across 40 fundraising rounds, which ranged from early-stage seed to late-stage institutional investments and an IPO.
Bayer said an organization’s CEO describes the company’s overall vision; the COO explains how the company will operate to achieve that vision; “and the CFO connects it all together in financial terms, which relate that broad vision, the operations, and then the way that turns itself into a return for investors.”
“Sometimes you tell that story through anecdotes…sometimes you tell it through metrics. Usually it’s a combination of those things,” Bayer continued. “And so the storyteller needs great facility with how to express the vision, how to talk about operations, how to talk about metrics, and then put that all together in a framework that an investor can absorb and get confidence in.”
A lawyer is also a critical member of the fundraising team, Bayer added, so that someone can decipher the seemingly endless legal terminology. “An attorney can help you with that, particularly attorneys at some of the larger firms, because they have their own partner network they can speak to,” he said.
Bayer put it in perspective: A CFO will, throughout their career, be involved in one or two A, B, and C fundraising rounds, and perhaps an IPO or two, he said, “but certainly nothing in comparison to what an attorney does.”
Kamon said she works closely with ACE’s lending team and the fund development team—which is responsible for meeting with and soliciting donations from individuals and philanthropic foundations—to ensure the organization has the numbers to showcase its work and that this information is communicated with potential donors.
“For example, one of the KPIs we track is how many loans we give to women, how many loans we give to certain minorities,” she said. “All these types of KPIs…we have to work together with our fund development teams and our lending team to make sure we are tracking those things.”
Kamon said that ACE also shares its message and community impact through PR and social media, so that others “hear those stories” and want to be involved in ACE’s mission.