There have been a few changes to the network over the last few weeks. The Canadian site was renamed from PlanetDealflow.ca to CanadianInvestmentNetwork.com. This makes the purpose of the site a bit more obvious and uses a site naming scheme that is more in keeping with the other sites on the Dealflow Investment Network.

The SoutheastInvestmentNetwork.com site was renamed to FloridaInvestmentNetwork.com. Instead of having one site to serve the entire Southeastern US, there will eventually be sites for each state in the Southeast. At the beginning of this week, I launched one new Southeastern US site, the GeorgiaInvestmentnetwork.com. For a limited time, we are offering the first 10 entrepreneurs from Georgia a free premium proposal listing.

We also launched a new site in Europe called the BeneluxInvestmentNetwork.com. The Benelux region consists of Belgium, Netherlands, and Luxembourg. These countries have close ties in culture, language, and business. This region of the world is relatively affluent, includes the financial headquarters of Europe (Brussels), and has produced many world leading companies in pharmaceuticals, agritech, oil & gas, financial, and many other industries. I hear they make some pretty good beer in Belgium as well :-) The Benelux site is run by Marnik Ooms who speaks Dutch, English, and some French and German. Marnik was born in Belgium and knows the language and culture well. The site is in English because English is used for business in these three countries and having it in English makes it easier to share dealflow between our North American sites and the Benelux site. Here is Marnik describing in Dutch the Benelux site.

Het Benelux Investment Netwerk, maakt het mogelijk om Entrepreneurs uit Belgie, Nederland en Luxemburg te verbinden met investeerders uit de Benelux en een bestaand netwerk in Noord Amerika. De eerste 10 Entrepreneurs op zoek naar nieuwe investeringen kunnen nu gratis gebruik maken van de site. Bezoek www.beneluxinvestmentnetwork.com voor meer details.

So, investors, please update your investment preferences to include Dealflow from these two new sites (Georgia Investment Network, Benelux Investment Network).

We had a few snow storms over the last couple of days. I got out in the middle of it a took a few photos. There were some nearby rivers and streams that I thought would look nice in a blanket of snow. One of the photos that I find interesting is a photo of the river with a weird shape floating on the top. I took the photo because it looked like an oil emulsion of some sort floating on top of the water. What I think it was, however, was pieces of ice starting to form in the water creating a swirly whitish mass traveling down the river. You can see the swirly masses in this photo, however, if you look long enough at the largest white swirly mass (in the foreground of the picture above the rivers edge) you might see the face of a river spirit. I know that the mind creates order out of randomness and the icy river spirit is that sort of phenomenon, however, if there were such a thing as a river spirit this is how it might manifest itself.

This is the river as seen through a few branches.

Here are some tributaries to the river blanketed in some nice fluffy snow.

The river meanders along a tree-lined road.

It is easy to spend the winter complaining about the weather, but if you actually get out in it and marvel at its beauty, then the winter can be enjoyable in some of its fiercest moments. You also might also be lucky enough to see an icy river spirit if you look hard enough at the swirly white masses in the water.

If you google the topic of "investment pitching" you can find lots of articles and resources dedicated to providing advice on the best way to pitch your idea to investors. It occurred to me, however, that we may be reinventing the wheel as there is plenty of literature and discussion already on the topic of Rhetoric which, to me, encompasses "investment pitching" as one specific area of practice - albeit with some unique audience features that deserve specific attention.

Wikipedia defines Rhetoric as follows:

Rhetoric is the art of discourse, an art that aims to improve the capability of writers or speakers that attempt to inform, persuade, or motivate particular audiences in specific situations. As a subject of formal study and a productive civic practice, rhetoric has played a central role in the Western tradition. Its best known definition comes from Aristotle, who considers it a counterpart of both logic and politics, and calls it "the faculty of observing in any given case the available means of persuasion." Rhetorics typically provide heuristics for understanding, discovering, and developing arguments for particular situations, such as Aristotle's three persuasive audience appeals, logos, pathos, and ethos. The five canons of rhetoric, which trace the traditional tasks in designing a persuasive speech, were first codified in classical Rome: invention, arrangement, style, memory, and delivery. Along with grammar and logic, rhetoric is one of the three ancient arts of discourse.

So, are those who are skilled in the art of investment pitching skilled in the arts of rhetoric? Is the study of rhetoric that you might encounter in english composition and philosophy classes potentially useful when it comes to effectively pitching an idea to investors? I would argue that, yes, the liberal arts study of rhetoric is potentially very practical and useful in this regard. There is still some negative sentiment directed at the study of rhetoric that originated in the days of Plato and his criticism of the Sophists - that they were not seeking truth, just to persuade people to their often fallacious viewpoints through clever rhetorical devices. I think we should get over Plato's criticism and recognize rhetoric as one of those skills that seems to be in higher demand these days, especially in the world of entrepreneurship and private investing.

So how can we hone our rhetorical skills to improve our investment pitching success? One modern-day Sophist who appears to have a literary appreciation of the art of pitching is Oren Klaff. He has begun offering a set of internet YouTube videos on the topic of investment pitching that I intend to watch this weekend. So far, I've watched his first two videos and came away with a few useful ideas about constructing effective investment pitches. The idea that pitches should have the property of "narrative transport" is one such useful idea which suggests that Oren has a literary sensibility that informs his capitalist persona. The Triggerman Videos are largely unedited, low budget, and off-the-cuff set of videos on investment pitching which so far have contained a few rhetorical nuggets that make them worth watching. Here are the first two videos from Episode 1 in the Triggerman series so you can judge for yourself:

The sites were down yesterday evening and last night because there was a failure on one of the RAID arrays. We backed up data onto another disk and are now trying to rebuild the RAID system using a new hard drive. If this is successful we will swap out the failed hard drive and hopefully be back to normal with our RAID system. There should be no downtime while the failed hard drive is swapped out.

While the RAID array is being rebuilt, the sites are up and running normally. Just wanted to let you know why the sites were down yesterday evening and last night.

UPDATE: The RAID array has been rebuilt, failed hard drive swapped out, and all seems to be back to normal again.

You have a good idea but need capital to make it happen. You decide to pitch your idea to investors and see if you can find interested investors. You have a good idea and impress some investors who want to do some follow up with you. They want to know more information about your business. This is where many attempts to raise funds potentially break down. Why? Because some entrepreneurs think fund raising is all about the idea and haven't invested time into generating some basic financial information investors might want to know as part of their due diligence.

What financial information might that be? Most business plans are expected to include the following financial statements:

Income Statement
http://en.wikipedia.org/wiki/Income_statement

Balance Sheet Statement
http://en.wikipedia.org/wiki/Balance_sheet

Cash Flow Statement
http://en.wikipedia.org/wiki/Cash_flow_statement

If you are an existing business seeking funds, then you might be expected to have historical and projected versions of these financial statements. Your projected financial statements will be assessed for realism by your historical financial statements. If you are a startup, then you can only provide projected financial statements and these projections will be based upon industry and market research. Most banks will ask for these three statements when deciding whether to provide a commercial loan so it is reasonable to expect that a private investor might enforce a similar level of due diligence when deciding whether to invest in a business or not.

Now that you know what basic statements you might be expected to have on hand for business investors, you can do some research so that you are prepared in the event that potential investors ask you for them. The bottom line is that entrepreneurs should at least be familiar with these types of financial statements when seeking funding in case you are asked to produce them.

I just had an interesting conversation with a client of mine who started up a company 6 years ago and is starting to gain serious traction. He just finished raising a million dollars in the New Year to buy the ownership and rights to a medical device and is $200,000 short of a second million dollar fund raise for operational capital.

He pitched his project to numerous investors during the 6 months before his first million dollar fund raise. He put in many 20 hour days. He had the full amount raised just before xmas but a half-million fell through during the xmas/new year period when an investor had his check book out ready to sign over the money but dropped the bomb that he wanted control of the company (chairman of the board and powers to appoint other board members). He walked away from the deal because he did not go through all the effort to raise money to have the company taken away from him. He was able to find other investors shortly after he nervously walked away from that investor.

One of his take away lessons was that the first million was the hardest to raise. This was in part because it was a learning process to raise the money and he has become more effective at closing deals, sourcing the right investors, and filtering out investors who claimed they were interested but were dragging out the due diligence process too long.

After raising his first million it became easier to raise the second million in part because he established credibility and expertise from the first fund raise and in part because of the traction that the first fund raise created. What he learned from his first fund raise was to spend less time trying to get investors on board by not participating in a protracted due diligence process. If the process takes longer than a month then he politely tells them he has a fund raising schedule he is trying to meet and to contact him when they are ready to move forward. He is trying to reduce the amount of time he spends in sending ever more information to satisfy reluctant investors. He also requests promissory notes from interested investors to get faster commitments so he can move things forward and build momentum for getting the next investor on board. This is not the same struggling entrepreneur I knew a year ago - he is now a well-oiled fund raising machine.

It has been a long process to get his company to the stage where it has traction and can raise money in a more nimble fashion. There were many roadblocks that almost sunk his company before he could get to the stage he is at now, and his company is still not generating much revenue, but things are starting to look very promising and the expertise he has gained in raising funds can be translated into raising funds for other related projects that may require funding. We discussed working together in the future when his second round of funding is complete and he moves into the operational phase of his company's growth plans.

When developing a fund raising plan, you should account for your level of fund raising expertise and whether you have the expertise to close the full amount in one fund raise. Success in a smaller fund raise may lay the groundwork for increased velocity in raising funds for a second or third round. The road to raising funds is not without its stumbling blocks and near death experiences, but sometimes persistence pays off and you accumulate skills you never knew you had until you realize that raising money has gotten a lot easier because of the deal making, investor sourcing, and investor filtering expertise you have may have acquired from the fund raising school of hard knocks.

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