'The Investable Entrepreneur' with James Church

In this episode of The Evolving Leader podcast, co-hosts Scott Allender and Jean Gomes talk to James Church. James is passionate about working with founders to present a clear, concise, and credible business case to investors. He is co-founder and CEO of Robot Mascot, a global award-winning investment readiness agency and he claims that his clients are 40 times more likely to raise investment than the average start-up. James has been featured in Forbes, Entrepreneur Magazine, and on numerous industry blogs and podcasts. He has run mentoring sessions at Tech Hub, Google Campus and Runway East, and delivered mastermind sessions for Founder Institute, Design Museum, Dent Global, The Chartered Institute of Marketing and the University of East Anglia.

Referenced during this episode:

Claim your free copy of James’ book ‘Investable Entrepreneur’:
https://www.robotmascot.co.uk/investable-entrepreneur/

Take the PitchReady scorecard and benchmark your ability to raise investment:
 https://pitchready.co.uk/

Other free resources for entrepreneurs and start-ups:
https://www.robotmascot.co.uk/free-resources/

Other reading from Jean Gomes and Scott Allender:
Leading In A Non-Linear World (J Gomes, 2023)
The Enneagram of Emotional Intelligence (S Allender, 2023)


Social:
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LinkedIn             The Evolving Leader Podcast
Twitter               @Evolving_Leader
YouTube           @evolvingleader

The Evolving Leader is researched, written and presented by Jean Gomes and Scott Allender with production by Phil Kerby. It is an Outside production.

Transcript

Jean Gomes: 0:03

The startup economy is vast. Every day over 130,000 new ventures are launched around the world. That's around 50 million startups a year. The image of the startup is cool, but the reality is that 120,000 employed everyday to. There are many reasons for the 90% fail rate. Founders often fall in love with their ideas, tuning out evidence that the product doesn't solve a problem that customers care about. They may lack the experience or drive required to run a business, which is as any business owner knows hard, or they may fail to find the money because their story isn't compelling enough. In this show, we talk to someone who helps startups understand these pitfalls and builds a persuasive case to find the money. So if you're a budding entrepreneur, or want to create a venture within your organisation, tune into this great conversation with James church. And don't forget to download his free book, investable entrepreneur, which contains valuable set of resources.

Scott Allender: 1:33

Hey, folks, welcome back to The Evolving Leader podcast the show born from the belief that we need deeper, more accountable and more human leadership to confront the world's biggest challenges. I'm Scott allander.

Jean Gomes: 1:44

And I'm Jean Gomes.

Scott Allender: 1:46

How are you feeling today Mr. Gomes?

Jean Gomes: 1:48

I am feeling fantastic. As I said to another guest earlier this week, I am now five out of five nights having had full high quality deep sleep, and I'm feeling terrific. I'm going into the weekend with you know with something in the bank, which is brilliant. So yeah, I'm feeling

Scott Allender: 2:09

I'm feeling I'm feeling good. I'm feeling light on this Friday. I feel like some challenges this week, but they were all addressed and we got through it and I feel really really good. Nice. How are you feeling? satisfied that there was there was a lot of good work done so I'm feeling light and energetic and anxious and eager and a good way to talk to our guests. Today. Today we are joined by James church, James is on a mission to prevent great ideas from failing due to poor communication. He believes that too many founders failed to raise the capital they need because they're unable to convince investors that their business is the one they should back. He is the co founder and CEO of robot mascot a global award winning investment readiness agency and claims that his clients are 30 times more likely to raise investment than the average startup. He regularly contributes to Forbes, Entrepreneur Magazine and numerous industry blogs. He runs a mentoring sessions at Google Campus tech hub and mastermind sessions for our founder Institute, that design museum, dent global and Chartered Institute of marketing and the University of East Anglia. He's also the author of the best selling book, investable entrepreneur, which we will explore with him in detail today. James, welcome to The Evolving Leader.

James Church: 3:38

Thank you for having me. Thrilled to be here.

Jean Gomes: 3:40

James, how are you feeling today?

James Church: 3:42

I'm feeling good. Yeah, it's been a good week. Yeah, feeling really good. Thank you.

Jean Gomes: 3:46

Excellent. We've got just before we get into into all of this, we've got to find out what robot mascot means and where that came from where that name came from?

James Church: 3:56

I'm gonna have to credit my business partner Nick for that one. He's the creative of the two of us. He comes from a brand and advertising background work top 10 agencies in London and he'll tell the story better than me but I'll do I'll give it my best shot. So we we work with pioneers right we like to work with with pioneering individuals trying to try to challenge the status quo do things differently looking at the future in different ways. And that's where the robot part comes from. But but obviously robots in a lot of films, kind of the bad guys they take over the world. They destroy the humans. So didn't seem to be very good for a service based company that was the friend and ally of founders that wanted to be their biggest fan and support these support these founders to succeed so we so we added the kind of the mascot parts represent that part of the business where we're there with the fans with the mascots were there to cheer them on. And those two things blended together sounded pretty good. So it kind of stuck. So yeah, That's That's the story.

Scott Allender: 5:02

I like it. It's memorable. I like it. So let's, if we could, can we start with how you became a startup coach? And I'm specifically interested on your intentional focus on communication? How did that come to be?

James Church: 5:18

So, look, robot mascot started life as a branding agency. We were working with brands to elevate their communications. And because we wanted to, you know, when when when we started our profile of ideal client with these pioneers, and that naturally led us to working with startups creating, they're creating their brands. And as we help them communicate their their offer to their audience, it was only natural that they started asking us to help them communicate their offer to investors. So we started doing some pitch decks. To be honest, we had no idea no finance background, I'm a from a brand and marketing background, as I said, my business partner brand and advertising. So we didn't really know the space very well. But we kind of figured it can't be any different, you've got a thing you're trying to sell here, a product, which is your shares, and you have an audience that wants to buy those shares the investors, so all we need to do is understand the audience that we're selling this product to, it can't be any different to any other advertising or brand campaign that we've done. So that kind of got us in the space. And what we realised quite quickly was that founders weren't great at communicating their ideas in a way that investors wanted to understand them. And that led us on a journey to really understanding the mind of an investor who that target audience was. And to cut a long story short, after years of research and development into our approach and process, we kind of figured out a formula, that that really helped us create content that resonated with investors and allowed founders to translate their idea and their passion and their goals into the language of an investor that made them see the value in the in the shares that they were pitching to them.

Jean Gomes: 7:03

Given the financial climate at the moment that we're in, what are the prospects for startups today? And how is that dynamic between the entrepreneur and the investors looking?

James Church: 7:13

Hmm, I guess always a really interesting question, because you look at the financial climate today, and you kind of think it must be a pretty terrible time to be going out and raising investment. And you might look at the data and go Well, compared to last year is not so good. And compared to the year before, it's not so good. But if you take a longer term view, and maybe a 10 year picture, what you see what the trends is, during the COVID years, so 2020 to 2022. There was a huge spike in the amount of investment that was happening across Europe, globally, actually, but but if we just focus on Europe, it was about three times as much than 2019 in 2020, and 2021. incredible amount of funding. So when you look at the amount of funding being invested today, which has dropped down, you can create clickbait headlines saying investment is down 30% year on year 40%. year on year, those sorts of clickbait figures. But if you were to compare it to pre COVID, when things were a bit more normal, we're actually up something like 17%, year on year on on early stage funding 2023 versus 2019. So there's this weird little bit, this thing that happened everyone was sitting at home didn't know what to do. So I don't know they were investing in startups that I don't really know why it happened. It did happen. There was a trend that hedge funds, P firms were taking advantage of all of the additional capital that had been pumped into the market by government. And they, for whatever reason, decided to start investing in startups. And that meant, in fact, valuations increased, round sizes increased. And we just went through this weird little bloop boom period. And things have just settled back down. And actually compared to where we were in 2019. Last year was a really, really good year for startup funding and 2019. Everyone was super excited. It was a record breaking year is the fifth record breaking year on the trot. We were just seeing investment in startups going up and up and up had COVID not happened. And we were where we are today, everyone would be celebrating a record breaking year investments up 1015 17% Wherever the figure is I can't quite remember, we'd have a completely different outlook on what's happening in the market. So yeah, it's important to always look at these trends, both in the short and the long term. So yeah, 100% is harder to raise money now than it was two years ago. But it's also easier to raise money now than it was pre pre pandemic. So depends how you look at it as to what narrative you want to spin and being someone who focuses on communication It's always about narrative and spin, right? How do you how do you position it? Or what timeframe in that data do you use to present the growth of your business? Or the opportunity for raising investment and the market data? So, yeah, it's always interesting to me to see how just changing the timeframe of something he completely changed the narrative.

Scott Allender: 10:22

So in your book, you start by saying that entrepreneurs must invest in high quality funding assets to stand a chance of success. What are these? And why do some seem to struggle to get these basics in place?

James Church: 10:38

Yeah, so there's three critical fundraising assets that I talk about. The first is the business plan, then we have the financial projections, and then we have the pitch deck. So the job of the business plan is essentially to help you, as a founder better understand your own business. So you can articulate it concisely to an investor, you understand all the moving parts, the number of investors that might actually read your business plan is probably fairly minimal, read it cover to cover if you like. But the purpose of going through writing a business plan is that you can start to see all the critical moving parts coming together, you can analyse your strategy. So when you're asked a question, by an investor in the due diligence process, you've thought about how you articulate that part of your business. So it levels you up, it makes you more credible, it really helps in that due diligence, that scrutiny that you're under after the pitch, it also forms a really solid foundation for the thing that founders really struggle with, which is their forecasts, because they're sitting there in front of a blank sheet of paper, trying to create this second asset, I talk about the financial projections, got a blank spreadsheet in front of them or an empty template. And they're thinking, Well, I don't know, how am I going to grow put in x percent growth a month, or what costs do I need, and then just sort of trying to make it up on the fly, and then they don't feel comfortable being able to back themselves up in front of an investor. So when an investor says, well, you're growing too, too quickly, there's no way you can grow that at that speed. They go, I'm so sorry. Let me redo this, and I'll send it back to you. That doesn't show confidence in it create confidence in the in the investor. Instead, they want to say, Well, based on the business plan, we've written all the research, we've done all the considerations we've done around x, y, and Zed. You're right, this growth is ambitious, but we believe it to be achievable because of all of this information that you can reel off as a result of your business plan. So the business plan becomes the foundation of a credible and solid set of projections, and enables you to create these forecasts and much more compelling. These forecasts themselves need to be fairly detailed for the European investment market, this different culture to, to the US, for example. So so in the US, you find 80% of early stage investors or ex entrepreneurs, it's more about the vision and the rolling with the punches of entrepreneurship. Whereas in Europe, in the UK, 80% of investors come from the city, they come from the finance background, they love spreadsheets, and numbers and number crunching, and that's their world. So their expectations on these documents are very different. And then you've got the final asset. And that's the pitch. And the pitch is obviously there to summarise all of this detail in a clear and compelling and articulate way. But the mistake founders make on that the biggest mistake they make is they're pitching for investment. And you're never really pitching for investment. When you pitch to an investor, what you're pitching for his time. You're pitching for them to engage enough in you and your idea and deliver them enough credibility about you and your intentions. But they want to invest their time in finding out more about going through the forecast going through the business plan asking you questions, seeing if they want to take an actual stake in the company seeing if they want to invest. So you're really pitching for the opportunity for to convince them later down the line to invest through these other assets, the business plan and the projections, they're what close the deal. The pitch opens the door and buys you the time, you need to get them over over the line. And I think a lot of founders think the pitch is the only thing they need. And it's like Dragon's Den, or shark tank or whatever it's called in your country. And there's a stack of cash on the table. And if they say they're gonna invest, they walk out the room with the money in their hand. And the reality is 20% of the deals that go that seemingly get investment on TV actually go through due diligence and end up closing. And that's because of all of the other stuff that gets missed. And that's really what the book is about is how to use these assets as as sales collateral for selling those shares so that they're essential. Your your presentation document your pitch, your brochure, your proposal document, all of the things you would need to make a sale in a b2b environment. That's essentially what these are their communication tools to get an investor to trust you with their money, essentially.

Scott Allender: 15:17

So you're saying only 20% of the stuff I see on Shark Tank actually happened?

James Church: 15:22

Something like that. I don't know the exact figures, but the vast majority of them never go through. Because something comes up in due diligence, they pitch a good idea, they tell a great story, the investors are excited to take things in a real world scenario, that's called an expression of interest. They get i Yeah, I'll formally express my interest in this round, and I'd be able to contribute X towards the total. And now let's go through a series of due diligence. That's boring for TV. So So TV is like, yeah, I want to give you the money. Right? So so no one wants to go and watch a due diligence process. Right? So so it's, it's kind of made for TV, and it's really just an expression of interest. It's not a formal commitment to invest. Yeah, that's really interesting.

Jean Gomes: 16:18

So let's stay with the pitch for a moment, because there's a lot of focus on that, as you say, and there is just an abundance of opinions and memes and posts on LinkedIn, and Instagram and Tiktok. About You know, what a perfect pitch looks like, can you lead us through the key ingredients, and some of the pitfalls that that whole kind of world might miss that entrepreneurs and startup teams fall into? Because it goes both ways, I'm guessing.

James Church: 16:45

So I mean, in terms of a, a great pitch, it is, you know, does come to telling a great story, but we can use, tried and tested principles for for communication. So we, in my book, I talk about five act structure. So organising your content in into five acts, five chapters, whatever you want to call them. And the reason I use a five act structure is because we've actually been communicating in this way for centuries. So I think the ancient Greeks are the first people to write plays in five acts, Shakespeare is all written in five acts, you know, historically, we've communicated in these five phases. And when you, I'm not going to go into the detail on playwriting, but if you were to Google, what these five acts are in playwriting, and you will cross reference them with the key elements of a pitch, they're remarkably similar. And I made the comparison in the in the book, and it's a great way to structure a narrative. So you've got the initial hook, which draws you in makes you want to continue reading the pitch or engaging in the presentation that's happening. And that's got to be your big vision, beyond making money, maybe some incredible piece of traction that you've got, that's just going to blow them away with something that makes them sit up and take notice, then you've got the second act, which is kind of the essence, you know, now we've got them hooked, let's quickly and clearly unpack the essence of the business, what's the value proposition? what problem you're solving? Why does this need to exist in the world? Now you've got them kind of intrigued by this idea, probably thinking this, this sounds really good. This is, this is a really cool idea. Now we need to convince them, that it's not just you that thinks this is a great idea, not just your mates, not just them sitting there, getting kind of carried away by this enthusiastic founder pitching this incredible vision that that is actually something the market wants needs. So we have the third act, which in play writing would be the climax of the story. But and this is the climax of your pitch. This is where you get the ultimate buy in. Because he you share the evidence you have around it. Investors call it traction or validation. And depending on where you are, in your development cycle, it's either validation that this is something the market wants in the market needs, or its actual traction of people adopting your product and doing so at an ever increasing rate. But either way, you're providing evidence and social proof and fact backs up the vision is something people want, there is demand for it. Then you have the fourth act, which is the plan. Here's a summary of the business plan four or five slides, just saying this is what we intend to do in the short and the long term to grow this business and deliver you a return on your investment for setting the scene that there's a credible plan to actually go through if they were to take the conversation forward. If they were to book those second meetings if they were to invest their time. Then you have the fifth and final act, which is the Ask Don't forget to ask for the money, have a call to action set next steps. This is how much we're raising. This is the deal terms we're expecting, if that all works for you. Let's continue the conversation. So you have to ask you have that close that call to action. So if you can create that five act structure, what you're really doing the reason this works is psychology. Usually you have the first couple of Acts, which is creating an emotional connection with the investor is speaking to their heart, it's getting them to buy into the vision and the value proposition gets them excited by what you do. You then have the plan and the ask on the other end, which is all the logical information, the plan the financials, the money, is speaking to the head, it's getting a logical buy in. And then you have the, the connection between the two that the evidence the third act in the middle, and that is transitioning the narrative, it's using social proof fact evidence to support the support the emotional feeling. And in that moment, you're transitioning the brain from the sort of the heart to the head, the emotion to the logic, so you're making it easy for for the brain, psychologically, to absorb the information, you're taking them on this emotional and Logical Journey. And I go back to mine and my business partners experience in marketing and advertising. And any good marketing campaign, any good advertiser will say, you need to speak to the head and the heart, you can only sell a product, when you've got that you can speak to the head and the heart, you get the emotion and the logical buy in from the customer. And then they will buy your product. And it's just applying those same principles to raising investment. As I say the product is now the shares. And the customer is now the investor. And it's as simple as that.

Jean Gomes: 21:20

Where in your experience do people struggle most with with those different different acts?

James Church: 21:27

I think the thing they struggle with most is clarity. Because less is more. With any again, going back to advertising marketing communication that makes you want to buy something, or engage in something less is more. The best headlines, the best ad campaigns are so simple. And there's a tendency for founders to try and be too clever, or try to explain too much about their incredible idea. And your pitch becomes a full business plan, it becomes 50, something slides hundreds of words, and no one wants to engage in it. Less is more, because if they're intrigued enough, they'll want to invite you in for a meeting or they'll want to take you take questions and go through this due diligence process to find out more if you try and give them everything all at once. They're just going to switch off, they're going to glaze over, you're going to get that sort of zombie stare of just kind of lost, I don't really know what you're talking about. And founders often think that when they get questions in a pitch, it means they miss something out in their in their presentation, they should have said that and they go away and they add a slide or they add a bit of content to cover that. So don't get asked again. The fact that the investor is asking you questions, means the pitch has done its job, they're engaged enough to want to find out more. If they're not asking questions, you've lost them. There's no relationship to be built, you can't build rapport, because you're not having a conversation. They're just going oh, thanks very much for your presentation and shut the door on your way out, I'll be in touch that is not the result of a good pitch, you know, and you're walking out going brilliant, no questions, I must have nailed that. No, less is more, invite them in for give them just enough nuggets to make them say, tell me more about this bit. Tell me more about that. And then you've got rapport. Now you're building a relationship. And now you can showcase yourself to be a really good strategic entrepreneur with a plan and a plan of action. You know, what you want to do? You've got insights in your market, and you can, you can build a relationship with these people that are ultimately backing you and your vision. And, you know, that's what this is about. It's just relationship building.

Scott Allender: 23:42

Jean gives me the zombies stare all the time. So I know what that feels like.

James Church: 23:46

We've all we've all had the zombie stare at some point.

Jean Gomes: 23:49

Yeah, less is more Scott.

Scott Allender: 23:54

So James, how does the entrepreneur get into the head of the investor to really connect with what they care about?

James Church: 24:03

Yeah, I mean, it's really difficult when you're not an investor yourself, but it's the same. You're not necessarily the customer of your product, and you're able to get into their head and understand what what they want. That's usually through market research, right? You talk to your potential customers, and you find out their wants and their needs. So the best thing a founder can do is months, possibly years ahead of when they actually planning on raising investment, start attending pitch events, networking events, talking to investors, finding out their wants and needs, what they care about what they what they like to see in a startup and then you get a bit of an insight as to what they're looking for. The other thing you do start reaching out to them and saying, Look, I know you invest in my space. I'm not looking for money. I had six months away from raising any investment but I'd love to just pick your brains I'd love to find out what what I don't want to waste anyone's time so I want to Know what I need to achieve myself before, he would be interested in even having a conversation with me, let alone investing. And then you can start to draw insights as to okay until I get to this stage until I've been able to achieve these things. I, there's not really much point in me going out there pitching for investment. But the other thing to think about is like, what is the, what is the desire of an investor, the desire for an investor is to realise a return, right, and they're taking a strategic gamble with their cash. And they're, that it's is no different to gambling, they're they're picking maybe 10 companies a year to invest in, maybe more depending on how much they've got to invest, and then making strategic bets on these companies hoping that one will pay off and the others will fail, but the returns from one will pay off the other failures. And the game, if you like, is to try and pick as many winners as possible. And that's what they're trying to do. They see you instantly as a risk, you're a risk to them, but you are good risk. And can you deliver them outside returns that not only deliver the return that they would want from an investment into a company, but also pay off all the losses that they're going to make are the ones that don't fail. So if you think about a typical VC firm, they might make, there's something called the VC power law. And they might make, say, 100 investments with their fund. And they would expect 1% of those. So one of those investments to deliver something like 50 to 100, maybe 150 times return on their investment, that's the outsized winner, you then might have three to 4%, make a five to 10 times return, then you might have a few breakeven and the rest are gonna fail. So they're making a strategic decision, every single investment that they make, they have to believe can deliver that outsized return, there's no point going to pitch to them and say, I can get you five to 10x, every single one, because they know 99% aren't going to achieve it. One will, they don't know which one that is, every single one has to be able to show them how they're going to get 100 150x return. And unless you can show and convince them of that, you're not going to win their investment that you're not going to say, I'm going to be one of the people that gets the five to 10x. It doesn't work like that. They're they're the ones that ultimately haven't delivered what they promised. Still a decent return. But it's not the worst because because a VC funds got institutional investors in that they've promised a 3x return to typically. So they've got 100 million fund, and they're promising to return 300 million to their investors. And the way they do that is by making big Gamble's on startup businesses, hoping that one of them will get 150 times return, pay back all the losses and be able to deliver their investors the 3x return they promised them. So so really understanding how VCs operate, and that most angel investors, as I say, in the, in Europe and the UK, certainly ex VCs or Ex Finance people, they're, they're thinking in these numerical terms of kind of going, I've got X amount to spend, I'm going to split across X number of deals, and if they've all got the potential of achieving X return, and I have a 20% stake in 20% stake in all of them. And they're all going to be diluted by three rounds. So my returns would be x based on all of this data. And that's my investment strategy. And it it becomes a game of numbers, essentially. And so so the more you can sort of absorb about how how these investors think the phrase I often say is that great ideas don't raise investment. Great communication does no one's investing in you because you've got a great idea. They're investing in you because of all of the other things I've talked about today. founders that think it's the strength of their idea that raising the investment are the ones that will fail, if you're going around going, I've got a brilliant idea, give me give me your money to make it happen. You're just not going to win any any investment at all. No one else cares about your idea or any you care about your idea.

Jean Gomes: 29:17

So you in the in the book, you talk about the fact that just to pick up on this idea of trying to get the financial perspective on this that many startups because they're operating on a hand to mouth way of working is inevitable. But that also influences how they think about their long term funding journey. So how do you help them to break that short term thinking so they can get successfully into that scale up phase?

James Church: 29:41

Yeah, it's some it's a challenge because you do just tend to focus on the on the short term. So when I mean a lot of what we do in the in the preparation before we even start producing any of these materials or preparing for investment is to take our clients through a strategic The planning process of kind of pulling them, asking them the right questions to pull themselves out of that short term thinking and kind of going how, how does this map out in the longer term? What What's the ultimate goal here? And let's work backwards from there. So what exit? Do we need? What what do you believe you can achieve? What do you want to achieve in terms of ultimate valuation and potential exit? How does that align with what investors want to see? And how can you plot things back from there? So if we, if we need to hit, say, 50 million in five years to satisfy an investor? How do we make that happen? Is it just pure sales and marketing and growth into capturing market share? Or should we be should we be making strategic acquisitions of other businesses to increase the overall valuation of the company and so actually buy in resource and value and those sorts of things, there's loads of ways to make that happen. And it's not always the obvious. So yeah, so it's just about kind of working back from one getting alignment, in terms of your vision, and the investors vision and making sure that you're comfortable with presenting something that an investor would feel comfortable with. And that, you know, if you have the ambition to grow your company, but you want to be in that company for the next 20 years, until you retire, and it's your pension plan, it's probably not aligned with what investors want, which is a return in five years. So you either need to be accepting of the fact that you might want to shift those goals, if you want investment, or accept that perhaps the majority of investors won't be interested in your opportunity, because you're not looking to exit quick enough or scale fast enough. So it's all about just kind of getting alignment, and then working back from there again, how do we how do we actually make that happen? And then, once you've plotted that is kind of going so what's our next strategic milestone, which is either usually the breakeven or your next round of funding. That's this round of funding gets you to one of those two points in time. And what are the day to day month to month tactics that we need to spend this money on now to get to that next street strategic milestone, so then we can unlock that future growth and that future potential? So? Yeah, that's kind of the way we do it.

Jean Gomes: 32:28

If you're enjoying the show, you might also appreciate Scott's new book, The Enneagram of emotional intelligence, which provides simple, powerful tools to help us better understand ourselves and others available online at all major retailers.

Scott Allender: 32:47

Is AI having an impact on the pitching investor landscape?

James Church: 32:52

Yeah, I think obviously, you know, AI is huge. Right now. There's always trends. If we cast our mind back to, to lock down 2020s, there was the NF T's and blockchain and NF T was huge. And people were raising 10s of millions of dollars without even a pitch deck, they were just turning up telling people about their NFT platform and people were throwing money at them. Right. Just I literally spoke to someone a few months ago who did that exited their business and is now looking to raise funding in the current climate for another blockchain business and it's going I'm I'm at my desk, I have no idea what's going last time they just threw money at me what's what's happened. So there's always these trends, and there's always going to be investors that get caught up on these trends and AI is is clearly the, the most recent one, although it's sort of been bubbling away for a long, long time. So I think the thing that founders do that's probably a mistake is that they try to capitalise on these trends. So, for me a good business, a good business case, good idea. doesn't rely on blockchain or AI, or any of these technologies really, that they solve a problem, they solve a meaningful problem for people and the AI or machine learning or the blockchain is just a tool that enables you to realise that value proposition. So unless it's built upon a genuinely desirable value proposition and can be delivered at a price people are wanting to pay and deliver the result that they that they want, then doesn't really matter about the technology, the technology just facilitates that happening more quickly, more cheaply, more cost effectively. So I think there's a tendency to just go, I'm going to build an AI business and then what does that business need to be without really, it coming from a core value proposition that actually works in the market? So there's a tendency to just chuck AI or something like that into the business. So we were solving this problem we've been doing it this way, or maybe if we add AI into the pitch, we'll be able to target a load of AI Best as and were more likely to raise funding and it's just kind of a bolt on to try and open some doors and it doesn't it's not really needed, it's not really wanted not been tested on the market. So I think there's a tendency to just kind of leverage these trends and try and use those to open doors. And it never really works. Because the the investors that genuinely invest in AI note a bit smarter than that, they know that you're just you're not really what they're looking for. So So I guess it's it's kind of a double edged sword there, it kind of stimulates investment, and it stimulates demand. But it also means that you can fall into the trap of just kind of sticking AI on to try and capitalise on that on that trend. And we saw it with blockchain and LFTs. And and, you know, that happens all the time on the on the sort of other point of kind of, can founders leverage it? I mean, I think it's a great tool, right? If used in the right way, but in terms of I've been, we've been testing it, right? Who wouldn't go? Can we shortcut some of some processes or do things with with with AI, and it's just not good enough right now to do to do proper strategic thinking. It's not that good at making great sense of communication, either. To be honest, it sounds very generic, it's all very, you know, you spend as much time trying to kind of craft the prompt for for ver, chat GPT, then you do actually, you might as well have just done it yourself. By the time you've crafted the prompts and then re edited everything, it's it's regurgitated. We've just not found it to be particularly great at at this kind of stuff, because it's very, you know, every business is so unique and nuanced. And it spits out stuff that sounds good, but it doesn't really mean anything is sort of meaningless. It sounds good. And you first read it, and you think, Oh, that's really good. And then you read it again, you think it actually doesn't mean anything, it's just words on a page. So, so and I think we're seeing this across, like, you can see that with content marketing. And, you know, all areas, people are getting quite good at spotting AI regurgitated content, because it's meaningless. So I think it's got a long way to come before it can be a genuinely useful tool for communication and business strategy. But, you know, may I'm happy to be proof wrong, but I think we're quite a way away from it being genuinely useful.

Jean Gomes: 37:28

So we focused a lot on you know, how you how you win the the investor over what should the startup or the the entrepreneur be looking for? In that investor? both good and bad? What are the kind of pitfalls in trying to find the marriage?

James Church: 37:48

Yeah, and, and that's what it is right in marriage, that they're going to be with you for a long time. So you need to, you know, as much as you want their money, you also need to make sure that the relationships right, and, you know, first rule of thumb is Go with your gut, if you're, if you're unsure, you feel uneasy with this individual, this is probably a good reason. Do your own due diligence on them, you know, ask them for a portfolio of founders, contact those founders. What's this investor? Like? If they're not willing to give that up? It probably means they're a pain in the ass. If you speak to those founders, and then they'll say one of two things, I'll say absolutely great. They're so helpful, so supportive, they let us do what we're good at. But they also are happy to give us strategic advice if we ask for it, but they're not a nuisance. Or they're going to say, Oh, they're a real pain every week. They're contacting us how are things going, I spend as much time reporting back to these investors than I do actually getting on with growing the business. They're a real nuisance and a real pain. So try and find out from other founders, what they're, what they're like. We've got a list of questions that we give our clients as to what what they should ask investors, while investors are, you know, putting them under the spotlight and in scrutinising them, feel free to hit back with your own questions of about their experiences, and how do they operate a passive? Are they active? Do they want to be heavily involved? They want to board seat? Do they want to be an advisor? Do they are they happy to just not have any involvement? How often do they want to be reported to what do they care about in terms of what's reported? You know, just figure out what their what they want their involvement to be. And, you know, there is no right or wrong about having a passive or an active investor. It's just, it's got to align with what you want. You don't want to be expecting a passive investor and then to end up with three or four very active investors that all are fighting for attention and time and trying to give you input and pulling you in different directions. Making sure they really aligned with your vision. Because if you've got a vision to do this, and they're coming in because they see the opportunity for something very different and you're We're not quite lined with that yet, they're going to be forcing you into an area where they feel they can get a return, which isn't quite what you had in mind. So a good example of that is we've got a client, right now who's building a marketplace for secondhand bikes, right? sounds fairly simple. The investors that are interested in this have spotted the opportunity of the data that they can collect through this platform being highly valuable to the cycling industry, that not really thought about this as being particularly valuable or anything they really cared about. They just wanted to realise their original vision. But they're actually really, you know, they're really on board with that. And they're like, my eyes are open, this is so cool. I want to learn more about it, and that investors come on as an advisor, and they're working together towards this shared vision. But it could have easily gone the other way, right? I don't want to be a data company, I want to do this. And had they decided to work together, then there had been a constant conflict along the way. So it's about making sure you're making that right decision. And you you find out as much about them as they're trying to find out about you. I think.

Scott Allender: 41:08

So staying with investor relations for a moment, I'm curious about when things don't go according to plan. I imagined that some entrepreneurs may feel tempted to sort of avoid telling investors early, that things aren't going to planned and they may need to be rectified. What's your advice on transparency and timing? And how do we approach bad news?

James Church: 41:33

Yeah, I think just like you would in probably, or at least, how you would expect yourself to behave, you don't always do it in the situation, right. But but if you were to think about it in any other situation, you would say, Be open, be honest, be clear. Be You know, if you can bring them in, yeah, these most investors are experienced individuals, either through themselves in business, or through having experience of the various portfolio companies they've invested in and seen failure in in the past. So leveraging that insight, and those skills can only be beneficial, right? So regular reporting, saying, We haven't quite achieved this. And therefore we're going to be a bit short of cash, our cash flow is now getting quite tight, we're probably going to run out of runway sooner than we thought we might need to bring that round forward. But then we quite in a position to close that round B. So maybe we need a bridge round, the more you can do to sort of talk about these things and talk about how you're planning on rectifying them things you can do to extend the runway, the more open you can be with the investor, the more they see that you're managing this situation as best as you can. And the more likely you are to win their support, both in terms of advice and guidance to kind of sit down with you have a chat, strategize how you might be able to turn things around, but also win their support. And we've seen this with clients as well when their support in terms of bridge funding. So they know you're on to the good thing, a couple of things have not gone quite how you anticipated, but your what you're building is valuable, and they believe that you will get there. And maybe you need another couple 100k Just to see through the next few months, so that you can then raise your next round of funding. And if you've been open and honest with them along the way, and they can kind of almost tell that this is going to happen at some point, they're kind of already prepared to kind of step up and make that happen. Because they've got a choice at this point, right, they can either lose everything they've invested so far, and let your fail. Or they can work with a founder, they believe in who's moving in the right direction will be at a slightly different pace than they hoped and put a little bit more cash in to see them through. Because they believe that that is you know, it's better doing that than lose everything I've put in so far. So they've got a decision to make. You can make that decision easier by being open honest, and bringing them along the journey. I think. So that would be my approach if it were me, but yeah, it makes sense.

Jean Gomes: 44:06

As we come to the end of our time, what what's a final piece of advice or kind of inspiration for entrepreneurs facing this, you know, this road ahead getting funding and moving through the, through the journey?

James Church: 44:23

I guess one recognise that it is tough. And only a small number of founders succeed at raising investment and you really do have to put the time and the effort into it until you put the time and the effort and focus on it. You're probably not going to raise investment I think you can easily get swallowed up by these TechCrunch headlines of so and so's gone and raised 10 million for their idea and and they haven't got any built anything yet and you think you can raise 10 million for your idea too and realising that they make the headlines because they're the exception not rule and really look to understand the audience that you're pitching to, which is the investor, what do they want to see, try and do less, more with less, try and try and break that funding journey down into sensible strategic steps and race. Little and often, rather than go for the big ask, and you're much more likely to succeed. And then the final thing is, as I said, understand that great ideas, don't raise investment, stop just pitching a great idea, thinking that people will see how brilliant it is, and just throw money at you do the work to convince them that you're the founder, they can trust with that vision to turn it into reality, and you know exactly what you need to do. And when you need to do it, to make that happen, and present yourself as a very impressive, incredible business leader, as opposed to someone with an idea. And if you can do those things, you're going to be successful.

Jean Gomes: 45:56

So on that note, I'd really recommend James's book because you provide a much more detailed analysis and set of recommendations and frameworks and questions and all sorts of things that will really help the entrepreneur walk through all the stages that we've talked about. It's, it was a it was a really great read. Thank you.

James Church: 46:15

You're welcome.

Scott Allender: 46:17

Yeah, James, thank you for your time and your insights, super, super useful, super actionable. And if somebody wanted to contact you for coaching, could they do that? What's the what's the way to get in touch with you?

James Church: 46:30

Yeah, I think LinkedIn is probably the quickest and easiest place to reach out. So So just find me on LinkedIn. Or you could go to the obviously to the robot mascot website at robot mascot.co.uk. From there, you can get a copy of the book for free, you can take a quiz to assess your investment readiness, you can book into his fundraising strategy session. That's that's like a weekly 90 minute session I do where I unpack all of this in a bit more detail. So yeah, loads of sort of free resources and things to sort of set you off on the journey from from that from that site. So yeah, they're they're probably the two places to hit.

Scott Allender: 47:08

Brilliant. Well, friends, thanks for joining us today and remember, the world is evolving. Are you?