How To Close Investors For Your Seed Round (Part 2)

In my last post I talked about the “Test Closing” technique that we teach founders to surface objections before going in for the final close.

In today’s post I’m going to address the final step of the 7 step process of doing super effective investor meetings: The final close.

As a reminder the 7 step process is:

Step 1: Engage
Step 2: Build Rapport
Step 3: Qualify
Step 4: Enroll
Step 5: Handle Objections
Step 6: Test Close
Step 7: Close

In previous posts I went over steps 1 – 6, so today we’re going to talk about the final step – sealing the deal, the Close.

So, here’s how to think about this: If you’ve handled all the surface objections and used test closes to surface any buried objections, well then there should be no objections left!

And if there are no objections left, and you have done a good job of transferring your certainty and excitement to the investor, then that investor should be excited and have little resistance to moving forward.

Said another way, if there are no more objections you essentially have the sale. But just because you have the sale doesn’t mean you can’t lose it!

So here are some thoughts on the final step of our 7 step process: the close.

When you realize there are no longer any objections, that is your cue to move into the close. In sales there are number of different kinds of closes that people use. And as I’ve said a million times Fundraising Is Sales, so luckily we can steal some of these closes from sales training and adapt them to closing investors for your seed round.

Before I show a couple different kinds of closes, the thing to realize is that the purpose of the close is to seamlessly and pleasurably transition the conversation from a discussion of a conditional or theoretical investment, to getting a concrete commitment to invest and then to figuring out any logistics that still remain.

Closing investors is fun – The better you get at this the more fun you’ll have.

Ok so with that in mind, here are few ways to close that I liked to use at Kindara and that you can use to fill out your round:

 

The Assumed Close

The assumed close is just what it sounds like. You assume the close (based on reading the energy of the investor) and move straight through the process of sealing the deal. It’s super smooth and easy and only backfires if you read the investor wrong. An example:

You: “If you were going to invest how much would you want to invest?” (TEST CLOSE)
Investor “$50k”
You: “Is there anything else you need to commit?”
Investor: “I don’t think so.”
You “Ok great, welcome aboard. I’m looking forward to working with you. Can I shoot you the docs to sign?”

As I said the assumed close is easy when you have a lot of momentum in the meeting and can feel the investor is ready to commit and move forward. Easy peasy.

 

The Either/Or Close

This is a close where you give the investor a choice between two options. Again it’s important to read the person in front of you and give them options that make sense given the conversation. The Either/Or close is a form of the assumed close. An Example:

You: “If you were going to invest how much would you want to invest?” (TEST CLOSE)
Investor “$50k”
You: “Is there anything else you need to commit?”
Investor: “I don’t think so.”
You: “Great, do you want to sign the docs right now or get them in your email later today?”

The either/or close can be a little sneaky because as you can see it contains a little misdirection, but I think it’s ethical if you correctly read the investor and give them options that makes sense like in this example. Essentially you are moving forward towards what you both want at this point so just keep the momentum up and present options that make sense to take the next step.

 

The Impatient Close

This is one I used a lot as part of a fundraising process that was hectic and contained lots and lots of meetings. As we would get towards the end of the meeting I’d just say something like “Hey Bob, it’s been great chatting. I’ve got to hop onto another call in a minute but it sounds like you get what we’re working on. Are you in? and if so how much space would you like?”

The thing I like about this kind of close is it makes it quick and easy for the investor to commit and for us to quickly move to the next step. Also by having lots of other meetings you are demonstrating that you are running a tight process, which typically gives investors confidence in your ability to raise the round and build a valuable company.

So here’s how this example might go:

You: “Hey Bob, it’s been great chatting. I’ve got to hop onto another call in a minute but it sounds like you get what we’re working on. Are you in? and if so how much space would you like?”
Bob: “Umm yeah I think I’m in. Let’s say $50k.”
You: “Great. I’ll put that aside for you. Next steps are I’ll send you the docs today to sign and the wire instructions for our lawyers escrow account. Do you think you can sign and wire by Friday?”
Bob: “Yeah should be no problem.”
You: “Great Bob. I gotta jump onto my next call. Welcome aboard! excited to work together to build something awesome. Please call me with any questions.”
Bob: “Great thanks! Bye.”
You: “Bye.”

I love the efficiency of this close. Quick and painless.

The Prescriptive Close

This one is for the case where you have an investor who needs a little more hand-holding. Sometimes you’ll ask “If you were going to invest how much would you want to invest?” and the investor won’t have an answer. You can tell they are excited and want to be a part of what you are building, but they either feel uncertain about the amount, or just need to have their hand held a little more. In this case you need to take the lead and help them get over the line.

For Example:

You: “If you were going to invest how much would you want to invest?” (TEST CLOSE)
Investor: “I’m not sure, what would you recommend?”
You: “Well based on what you told me about your situation I think $50k would be a good amount. If we are able to deliver that would produce a significant return.”
Investor: “Ok that sounds good.”
You: “Cool so should I count you in this round at that amount?”
Investor: “Yes let’s do it!”
You: “Great. I promise I’ll bust my ass to make this the best investment you ever made.”
Investor: “Awesome!”
You: “Ok so I’ll make sure you get the docs and the wire instructions right after this call. Can you turn everything around in the next 48 hours? We’re on a tight timeline.”
Investor: “Sure, should be no problem.”

That line “I promise I’ll bust my ass to make this the best investment you ever made” is a keeper. I said that a lot, because it was true and I think it sets the right context after the commitment has been made. Ok moving on..

The Hold Space Close

Sometimes you’ll meet an investor who really likes to move at their own pace. In this case sometimes you just gotta be chill and let the investor come to her own decision. In this case you can use the Hold Space Close to provide a little FOMO. For example:

You: “If you were going to invest how much would you want to invest?” (TEST CLOSE)
Investor: “I don’t know. I’ll think about it and let you know later.”
You: “Ok but how much do you usually invest?”
Investor: “It ranges depending on my level of excitement.”
You: (Noticing that the investor wants space) “Ok great so when should I expect an answer from you.”
Investor: “Let me look over the materials and give you an answer by Friday.”
You: “Ok sounds good. Just so you know, I’m going to hold $100k for you until I hear from you on Friday.” (This works WAY better if you have lots of meetings and competing interest. But can still work without)
Investor: “Ok thanks sounds good. Talk to you Friday.”

You’ll notice that all these closes: i) Seek to seamlessly transition the conversation from IF an investment is going to happen to WHEN and HOW the investment will happen, ii) get a concrete commitment, and iii) lay out next steps for what will happen next.

That the core of closing. You have spent the first 6 steps of the meeting setting things up, transferring excitement and surfacing and handling objections, and in closing you are ready to complete the process and welcome this investor into your round.

Happy closing folks. If you want a longer discussion of how to put a fundraise together from A-Z please see my draft of the Get Funded Book and send me any feedback you have.

So that’s a wrap! 7 steps to running investor meetings that convert at 10x or 100x the rate of a run-of-the-mill haphazard unorganised pitch meeting.

Please apply this process and if you want or need help, consider applying to Fundraising Mastery where we lead highly vetted CEO’s through the process of getting really really good at this.

 

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