Shark Tank Dreams? Here's How to Pitch Investors to Fund Your Food Business
We have all seen aspiring food entrepreneurs take their shot in the “Shark Tank” arena, pitching big ideas on the future of food to world famous investors.
But what closes the deal on a restaurant or food product investment? Is it the founder’s ability to present their story without freezing under pressure? Is it answering an investor’s intimidating question confidently and intelligibly — versus blurting out a foolish reply?
The answers to these questions are simple but nuanced (and comprise a large part of ICE's Restaurant & Culinary Management program curriculum).
What is certain is that pitching an idea to a prospective investor, whether on ABC’s "Shark Tank" or over coffee at a local diner, requires a clear narrative rife with evocative details of “the hero’s journey” (i.e., the story of your product, from ideation to future bestseller).
Over the course of my career, I’ve raised millions in capital from investors in food and beverage concepts, and in my experience, the key to effective fundraising is linking your knowledge and passion with your prospective investors' emotions.
The good news is that you’re in food, and since food is inherently emotional, connecting feelings to finances is relatively simple.
Below are tips for making that happen. Taken together, they can help you pitch your business concept with confidence — and hopefully, get you closer to securing the investment needed to launch your entrepreneurial dream.
Fundraising Tip #1: Taste Buds Talk
A picture [of food] may be worth a thousand words, but a taste of food can be worth several thousand dollars (i.e., it has the power to seal the deal on an investment pitch).
That’s because our taste buds release "feel-good" hormones like dopamine, serotonin, and endorphins in the brain. These excitatory neurotransmitters are linked to pleasure and reward, and their release cues positive associations.
Taste has similar implications for your food business pitch. After all, investors and venture capitalists have taste buds, too, and are therefore, not immune to their transportive powers. If your product is delicious — and I hope you believe it is — those neurotransmitters will help to connect your product with joy. And who doesn't want to contribute to making more joy?
Too many food entrepreneurs attempt to sell an investment without making the product’s taste the pitch’s centerpiece. This is a mistake, especially when you consider that taste is the number one purchasing determinant for consumers — and investors are both your first and your most critical customers.
To skip the use of this secret weapon is to, quite literally, leave money on the table.
On your next pitch, capitalize on your prospective investor's brain chemistry by simultaneously offering a taste of your product and providing bottom line business details. The joy you’ve created through taste just might trigger a financial windfall.
Fundraising Tip #2: Understand Your Financials
No matter how creative a food product or business concept is, it’s still a business endeavor, which means that it lives or dies by its financials.
Because, let’s face it: business is about money, and investors expect you to take their money (aka capital) and turn it into more money. If you aren’t familiar with terms like “cash on cash return,” “EBITDA,” and “cost of goods sold” — all of which are as fundamental to financial jargon as “hello” and “how are you” are to conversational English — you won’t be able to effectively communicate with investors.
Learn the financial language of your food business first, then speak this language with assurance, clarity and confidence.
Fundraising Tip #3: Communicate Your Passion Through Storytelling
Storytelling sits at the intersection of human evolution and contemporary culture.
With regard to fundraising, storytelling is how you convey your entrepreneurial trials and tribulations — and how you have successfully overcome them with grit, tenacity and passion.
Savvy investors recognize this trifecta of characteristics, and they view it as an indicator of your ability to deliver on your vision. As such, communicating your grit, tenacity and passion is key to convincing investors to hand you their hard-earned cash.
Every self-made investor should recognize elements of their own entrepreneurial climb in yours. If your storytelling isn’t powerful enough to give your investors’ confidence in your passion for your product, they’re not likely to financially support it.
When investors write checks to food entrepreneurs it's because:
- They believe in your food product’s desirability.
- They’re confident you speak the language of money.
- They sense the depth of your passion.
Employ these three fundraising tactics in your next fundraising round — and watch your confidence soar.
