How this Ex-NHL player raised $500K in venture capital with just a pitch deck and prototype
This is the story of how Zenkai Sports Founder Doug Lynch built a brand that attracted buy-out interest from some of the biggest names in the sportswear and performance apparel industry and raised $500K all in just three months.
“Are you someone that can attract talented people as your team grows? Are you someone people want to work with? Are you someone people will follow and believe in?”
These wise words come from professional athlete turned serial entrepreneur, Doug Lynch. His company, Zenkai, has licensed Filium® technology to create the future of performance apparel. Zenkai improves performance by enhancing our body's sweat management system. Scientific studies have shown how vital sweat is in cooling our bodies during activity. Zenkai, because of Filium®, keeps a thin layer of sweat on our skin which saves our bodies the need to produce more sweat during exercise, therefore keeping us cooler.
As a Contributing Writer at Start It Up and founder of a startup myself, I often speak to Entrepreneurs who have accomplished amazing things in their careers. This week, Doug and I discussed how he built Zenkai with only a pitch deck and prototype.
“Fundraising is one of the most gruelling, time-consuming, humbling, ego-shattering parts of starting a business. I guess that’s what makes it so exciting and rewarding when you can pull it off.”
When pitching investors, the most important factor is preparation, being genuine and proving your passion. A company’s presentation must be dialled in, packed full of information, and easy to follow. Each slide in your deck should succinctly communicate a key message and provide a clear context for the rest of your presentation. By reducing the number of words on each slide from your presentation, investors will see the heart and passion in your voice, while having an easier time understanding your vision and gaining traction.
You need to “read the room,” but it’s not just about what’s going on in the room. It’s a matter of knowing who the leader is in the room and what they want or expect. Start noticing who the lead investor in the room is and who are the key decision-makers. Some people are numbers people and some people are vision people. Are they early adopters? Or are they traditional investors only? You must know who the conversation needs to go to and how you need to position your pitch.
Investors want to invest in companies they can help with their experience, in addition to their capital, as it mitigates their risk.
When I would pitch investors and it was clear in the first few minutes their background was in a field that couldn’t help Zenkai the conversations never continued. This doesn’t mean the investor has to be in the industry you are going into but there needs to be a skillset so when they write a check they can also be able to help when needed.
Here are five lessons for starting a company and raising capital, based on my discussion with Doug:
- You are going to suck the first time.
“When Zenkai was born it was trial by fire as I learned on the go and figured it out as I went. I always enjoyed people, public speaking and presenting — mostly because of many years spent coaching youth sports and running camps and clinics. These soft skills came in handy once I realized how difficult it is to raise funds.”
It is never fun to put yourself out there and have others not believe in your product or vision. No one likes rejection, but in order to raise money, you need to pitch a ton of people and you will hear a ton of no’s. It will be hard some days but the founders that succeed are those that have the ability to persevere through the ups and downs.
Most of the time there will be no shortage of external factors that can be bad. There are so many things you can’t control and it’s not easy for a small team to succeed. This forces people to learn about all aspects of the business which is very important. However, this is precisely why investing in startups is risky.
“The message here is that your passion and exuberance for your project will come through and the more you tell people about what you are doing the better chance people might want to get involved. I must have talked to hundreds upon hundreds of people about Zenkai and at the end of the day the 3 people who invested were very close to, or in, my inner circle.
My advice looking back now would be make a list of everyone that would “take your call” and split them into two groups, possible investors and possible advisors. Start calling or meeting in person with all of these people and spread the word about your new business. You would be amazed at how connected everyone is when you simply start asking questions and putting your intentions out there. All it takes is one person to make one call and the word spreads.”
2. Bet on yourself.
Doug understood very early on that in order to convince himself, investors, future employees and the press about Zenkai, he would first have to demonstrate that he was willing to bet on himself.
“One of the first things you are going to be asked when pitching is how much you have invested personally. Even if it is a small amount, I believe it is very important to write a personal check. If you have zero funds, then I suggest bringing on a partner who can write a check so at least you can answer that question with “the founding partners have invested x amount”. Most investors want to know that you believe so much in your company that you are not only willing to invest sweat equity, but also cash.”
3. Build momentum.
People worry about missing out. Use that to your advantage. Explain how far you are willing to go with your project and how it will be funded and deployed in the market. Then, once you get an investor or become backed by a startup accelerator, use this to build momentum and generate more interest in your company. It’s a way to build confidence in your product or idea so people know others believe in what you’re doing too.
4. The market is saturated and the competition is too tough.
Never speak poorly about the competition to investors. Always remember that being competitive, you want to beat everyone and be the best, but it is important to respect other entrepreneurs and what they have accomplished already. That shouldn’t stop you from explaining why your business is better in different areas but it is always from the lens of respectful competition, not an energy of whining or jealously.
“Raising money for an apparel brand is not a unique challenge, as it is a very saturated business. Every minute there is another person out there starting an apparel brand. The important thing, like in any startup, is to find your niche.”
Even if the space in which your new product is launching is very saturated, focus on your unique network and how the problem you are solving affects or helps that niche group. Put your unique talent and personality into the project, even if it is only a small group of people. Put your efforts towards making a connection with others who care about your project and want to experience it for themselves.
“I don’t know how many people told me how competitive the apparel industry is and how much competition I will be up against. But guess what…..there is competition everywhere. What do you think people told Elon when he said he wanted to start a car company? “Hey Elon, ever hear of Ford, GM, Mercedes, BMW, Lexus, Hyundai?” Bottom line: don’t let people discourage you, especially if you have a niche community to sell to.”
5. A strong sounding board or confidante.
You will have days when you pitch to 10 people and you receive 10 no’s. The rejection isn’t easy, but it is worth it. Remember that it is a marathon, not a sprint. Rejection will happen. It occurs to everyone and there are no ifs or buts. For those challenging days, just remember that the more times you pitch, the greater the opportunity for success.
Make sure you have someone who you trust who can pick you up when the going gets tough. You’re doing hard work — always have a support network to lean on.
“They do not have to know anything about your industry or what you are trying to do — sometimes you just need someone to listen. I had many conversations with my Boston Terrier, James, while raising money and to be honest he gave some of the best advice.”
Moral of the story
“At the end of the day remember investors are investing in you as a person, as much, if not more than the actual product or service you are selling. What makes you worthy and capable of people investing their hard-earned money?”
Many professional investors know when someone isn’t doing their homework and is just pulling numbers out of thin air. This doesn’t mean you have to have all the answers because no one does. There is no crystal ball so people need to believe in you, see the passion and know that you will do what it takes to find the answers or battle through adversity when it comes. This will shine through when you pitch.
“all you need to have is one person to believe in your dream and you are on your way.”