Hugh Evans came up with the idea for Moneytech back in 2003, but the company – which provides short-term finance for businesses – didn’t get off the ground straight away. He needed millions in funding to get started.
Evans pitched to dozens of investors and ended up winning that $12 million. But it took him multiple tries to get the presentation down pat – and he says it’s a skill more entrepreneurs need to perfect.
So how’s the business going?
Our business continues to do really well. Unlike the banks, we pass on all the interest rate cuts, so it just makes us more competitive. It makes us stand out when we compete with the big guys like that.
Are you able to give an update on revenue?
Year-to-date revenues are nearly $6.5 million, so it’s going very well.
Describe how you came up with your idea. What was your first plan of attack?
We have a totally unique product. The way I came up with it was I just thought about the way you usually sell something to someone. You never really know when you’re going to get paid for it. You and I can enter into an agreement to buy some widgets, and when I sell them you agree on a price and payment terms.
But even though I’ve delivered them on time, I don’t know if you’re going to pay me on time.
So you may stretch the friendship and ask for an extension, but I still don’t know when I’m going to get paid. So I came up with the system where a buyer comes to Moneytech and says “if you give me money upfront, I’ll get the best price, but if we don’t pay you back you charge us interest”.
It’s a specialised credit card for business, essentially.
So how did you decide you needed funding?
Two things we had to do. The first was find a senior lender, somebody who could lend us money, and the second thing was we had to actually raise some equity in the business so that we could build the system, rent some offices, get some staff, and so on.
The first thing I did was arrange some angel investment, that was about $2 million.
Let’s back up a little. What was your first plan when you decided you needed finance?
The first thing I did was spend a long time researching the industry, which was an industry I’m familiar with anyway, and I knew lots of people because I’d spent 20 years in the sector before all this. I knew who all the managing directors were, who all the customers were, the resellers, and so on.
I just went and canvassed everyone with the idea to see if we could get some finance.
How did you come up with those people to ask?
I had lots of contacts. So I put together the idea, put together a presentation, and showed all the stakeholders. I believed I had an idea that was going to work, so I put together an information memorandum. And that was a lot of work; I had to go through every word about 10 times to make sure I got it right.
Describe how you came up with your pitch plan.
I tailored my pitch to each person. I went to so many people, to make sure the product would work for each segment of the market. Once that was done, I did the information memorandum, and then I made a slideshow presentation and perfected that.
Then I started contacting angel investors. All I did was spend all this time on the web, and I made lots of contacts. I made huge lists of people I thought may be able to give me some money.
How many times did you end up giving that talk?
I must have done that presentation about 150 times. I can’t even remember how many times I did it.
What’s the biggest challenge about that situation, when you’re pitching?
You’re very nervous, trying to tell everybody everything. Then once you get to about 10 or 12 times, you anticipate everything they’re going to ask you. So you start to cut out things that are really boring just to get to the message.
You need to really keep refining your presentation. When you’re dealing with people objecting to your idea, then you need to be able to be concise as possible.
What’s the hardest part?
Dealing with the monotony of it, walking out of meeting after meeting disheartened because it wasn’t for them. Or getting very close, with someone saying “this is fantastic”, and then it’s just the one little thing they get fixated on that’s a deal breaker for them.
You obviously got funding, so what was the point where things started getting better?
It’s the network effect, so people started referring me to other people, saying that even if they thought it wasn’t for them, they would refer me to others. The second thing is I started doing many more presentations to people who were known as sophisticated investors. That got me in the door.
For other businesses that are out there now preparing a pitch for potential investors, what advice would you give them?
Do your homework. Understand the market, your product, and your value. The next thing you need to do is write a clear and concise information memorandum, a PowerPoint presentation, and other information.
The next critical thing is to really understand your investors. Understand their backgrounds, and figure out what’s going to be their hot buttons or the things they dislike.
Finally, you need to be persistent. An hour is about as much as anyone can take, so be concise, get your story straight.
These are smart people you’re talking to. If you have a gap in your armour, they’ll find it. Make sure you’ve thought of your pitch from every single angle.