Hit your business goals with Tip of the Spear’s Sam Palazzolo’s advice on how to secure investors
By Jim James, Founder EASTWEST PR and Host of The UnNoticed Entrepreneur.
Los Angeles-based Sam Palazzolo helps companies raise money, communicate effectively when they’re raising money — and get noticed in the process.
Image from LinkedIn
Back in 2012, he founded Tip of the Spear Ventures after successfully leading a tech startup to a private equity exit. They were able to raise $8 million straight out of the shoot.
Before that, he also had his own sales business development consultancy. He brought the same blueprint and architectural plan to the tech startup and used that to not just raise capital but to actually develop their sales pipeline.
They were able to gain some traction and that mythical hockey-stick revenue graph became a reality for them. They drew the attention of a couple of private equity firms at around the 18-month mark. After 24 months, one of them ultimately purchased them, practically eliminating competition via acquisition.
Today, his firm has two sides: a venture side where they work with entrepreneurs, and a side referred to by McKinsey & Company and Deloitte as business transformation consulting, with a heavy focus on sales and marketing.
Screengrab from Tip of the Spear Ventures
Approaching Clients
Sam’s business transformation consultancy uses the same type of methodology that he and his team implemented at the tech company. If you think about consulting, it’s traditionally a handshake-type of deal with people who are within your network. They wanted to figure out how to expand that circle. They weren’t just interested in buck-shooting — they’re keen on specificity.
When they approach a specific organisation, client, or prospect, they want to outreach, connect, and see if they can develop some type of a relationship first. From that, the relationship can ultimately lead to a business conversation, wherein they tell clients how it is that their firm knows how to help them.
Sam said that they’re a value creation firm. They believe that each one of the organisations that they work with has a value that they provide to their end client. And how they convey that value can make all the difference.
What Investors are Looking At
Tip of the Spear is currently working with an engineer-led organisation.
Engineers come up with the most innovative ideas and they’re considered to lead the best organisations (or potentially the best). However, the problem is that as they’re engineers, they want to talk about engineering. If you have a financial background, you might want to know what the engineering specifics are but it’s not the only thing that you want to talk about. Engineers can lose those clients.
Now, the engineer that they’re working with is looking at putting a presentation before a financial community. The presentation is deep in the weeds; it’s so rich with engineering details that a financial investor doesn’t really understand.
Financial folks look at numbers all day. But it’s one of those things where they’re more interested in knowing something about what the business does. If they’re from an investor community, they particularly want to know:
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What is that you’re doing?
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What type of traction have you been able to achieve with what you’re doing?
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If we invest in you, what are you going to do with the money?
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What are we going to get in return for that money over what timeline?
There are the nuts and bolts — the essentials — of what an investment community wants to hear.
Image from Unsplash
Additionally, they have a relatively short attention span. This is why you have to be able to encapsulate those parameters within around two minutes. Nonetheless, it doesn’t mean that you can’t circle back and do deeper dives on each one. What you need is to devise a high-level architecture so you can convince investors that it makes sense for them to have a deeper conversation with you.
Essentially, this is what an executive summary is all about. If an executive reads it and they want to go deeper, they can; if they don’t, it means that they know enough to consider something dangerous or risky.
This is what Sam and company use an approach to help organisations share that value that they create and provide to the market.
Reaching Out to the Right Investors
Not all investors are looking for the same kind of investment. And that’s why for Sam, it’s important to research — what do they like to invest in? This information can give you some of the most productive types of conversations. He also pointed out that the things that don’t work are the generic, non-customised types of outreaches.
Specific outreaches and approaches also work in the sense that if the person you’re outreaching to can’t help you, they can still know somebody within their network who can.
Sam loves this about what they do: The financial and venture space is a community of sharers. If an opportunity is not right for them, they’ll share that information with somebody else and vice versa.
When asked if a business should specify who it is that they’re reaching out to, Sam stressed out the absolute need for it.
On Being Resourceful
Sam talked about an entrepreneur who approached his firm a few years ago.
The entrepreneur stated his idea and what it comprises. While it’s brilliant, the problem was that he was loosely trying to approach investors for about three years. His reason for not making headway with the investment community was that he wasn’t born with a platinum or titanium spoon in his mouth — he just didn’t have the network.
Image from Unsplash
Sam told the entrepreneur that his company might not be his best resource in that instant if he would give up that easily. He emphasised that most entrepreneurs aren’t born with a platinum or titanium spoon yet they are entrepreneurs. Sam himself was born in Detroit, Michigan in the shadow of Ford manufacturing plants and they had plastic spoons. However, he noted that it’s one of those circumstances wherein you have to figure out a way to get through.
This is especially relevant now that there’s a pandemic. It’s never been easier to get ahold of whoever it is that you want to get ahold of. You can outreach and connect with them and hold a Zoom meeting with them. They never have to leave the confines of their home offices or their kitchen table.
To find people to connect with, there are published listings of some venture capital, private equity, and even family offices. While plenty of such resources are available, Sam also pointed out the need to be a little more organic.
You can set up Google Alerts to see who is investing in a particular space. If you set that up, you can get up to 10 alerts each day. You can click a link to know more and you’ll be given a list of some articles that are published on the topic. If it’s a business article, somebody has published it, and that author has interviewed somebody. So it’s a great opportunity to organically find people and specify who it is that you’re reaching out to.
Another thing that works well but nobody takes advantage of is LinkedIn. Sam said that he’s convinced that they’re in the top 3% of companies that leverage the platform. LinkedIn is a great tool because it will give you geographic specificity as well as information on an industry, organisation, and leader.
Google Alerts and LinkedIn are two things that will allow you to organically search and pinpoint who your prospects are.
How to Make Your Company Different
Over the past years, Sam has encountered all kinds of crazy stuff from people doing outreaches. Some are worth looking at but the majority are not. And he and his company don’t recommend that type of hokey, gimmicky type of outreach. The entrepreneurs that they work with drive value and they want to be at the top 3% of their industry or space. If they’re value creators, then they have a unique value to offer.
Part of that is the presentation for what it is that they’re offering. An entrepreneur can have a unique perspective of their industry that can elevate them to be a valuable authority in their space — and set them apart from someone who’s got an organisation that’s only looking for some money or looking to connect with the investment community.
Image from Unsplash
To be a valuable authority, it’s also about the financial opportunities within their space. And through the solution that Sam and his team are offering, entrepreneurs can bridge those opportunities. The solution entails conducting an executive briefing, which is a 15-minute overview that establishes them not just an entrepreneur but an authority in the space.
If you’re looking from an investor’s perspective, if an entrepreneur doesn’t have a unique viewpoint to bring to the table during that executive briefing, then that entrepreneur is going to miss out.
On Building Tip of the Spear Ventures
For his firm Tip of the Spear Ventures, Sam also did the same thing as mentioned above. They did the same type of organic outreach where they set up Google alerts for their industry or for specific keywords. They develop their list of prospects monthly. They go hunt, reach out, and connect with people who are also outside of their network.
They also use an email-second-type of outreach approach.
Most people simply want to gather a listing, form a database, put it into a customer relations management (CRM) tool, and begin an outbound campaign where they’ll blast emails. At Tip of the Spear, they customise those emails. However, it’s only secondary. They’re a phone-first organisation: They place outbound calls, and it’s what differentiates them from others who reach out to entrepreneurs.
It also serves as the differentiator for the business that they work with. It forces the other party to actively pick up the phone. Making a phone call doesn’t necessarily mean conducting an executive briefing. It simply provides an introduction and establishes an appointment for a future date to conduct a proper executive briefing.
The outbound approach they’re using is value creation-driven, phone-first, and email-second. With this, they can outreach to an individual who doesn’t know that they existed two seconds ago. Then, they can introduce themselves, drive value creation, and set up a 15-minute appointment for an executive briefing.
Image from Unsplash
For inbound, they encourage entrepreneurs that they work with to follow HubSpot’s methodology (He said that he’s been a pre-IPO HubSpot fan since 2014). He has also written books and almost 300 articles on their website, which business owners can use as a resource. They also have a series of whitepapers.
Sam wants to establish his firm by doing an inbound and outbound approach to prospective customers, managing the sales funnel on a monthly basis, and challenging himself to outreach and connect with 50 different prospects a month. He does this because he doesn’t want his team to solely do that. He’s not willing to assign anything that he’s not willing to roll up his sleeves for. This made team meetings with their outbound people much more productive because they know that he himself is doing it.
To find out more about Sam and Tip of the Spear Ventures, visit their website at https://tipofthespearventures.com. On the website, you can find a chatbot that Sam himself is managing the reception for. He and his team have also developed a business transformation self-assessment workbook with 128 questions. It’s a do-it-yourself tool that you can use to assess your business using the four parameters that they use with their clients.
This article is based on a transcript from my podcast The UnNoticed Entrepreneur, you can listen here.
Cover image by Medienstürmer on Unsplash.
