Originally published on CourseHorse.

A woman you don’t know tells you that she’s going to run a marathon of 7-minute miles. She’s never run a long distance race before. Would you bet on her completing it in record time? Probably not, right?

“Watch me,” she tells you. And so you do. You’re impressed when she clocks her first mile at 7 minutes. A single mile does not a marathon make, but still, it’s a major milestone. Then she runs a second mile at the same 7-minute pace. And a third mile in another 7 minutes. Your confidence in her is rising. She’s still 23 miles away from accomplishing what she predicted, but she’s already at a place where you might just bet on her being successful.

Most VCs will not bet on your company after a first meeting. But when you use the right plan and the right approach, you can convert a “no” into a “yes.” Here’s the right way to get VCs to watch you long enough to bet on your success.

1. Describe A Grand Vision

Financeable businesses require investors to believe that: 1) you will win at what you’re doing; and 2) the market in which you’re operating is worth winning. The latter requires that you articulate an amazing opportunity, largely defined by the projected size of the market you are pursuing. A founder with a startup focused on selling groceries online should begin their pitch by describing the total money projected to be spent on groceries online over the coming years.

2. Predict The Trajectory

Success takes years, not months. To raise capital as a very early-stage business, you have to convince investors that your current size isn’t indicative of where you will be in the future. The best way to do this is to define a trajectory towards success and then set milestones that demonstrate you’re moving in the right direction.

Recently, I met with an entrepreneur to discuss her financing strategy. She designed a software solution that she was planning on selling to enterprises for $100,000 a year. We agreed that there were two significant proof points that she needed to achieve in order to demonstrate a high likelihood of success: price point and sales traction. We came up with a 6-month plan that would illustrate her successfully navigating towards these proof points:

  • In the first three-month period, she would sign on a single beta client at a $20,000 annualized fee; and
  • In the second three-month period, she would sign on two additional beta clients each at a $30,000 annualized fee.

3. Build the Plans; Share the Plans.

To achieve your milestones (and inspire others to believe that you will achieve your milestones), you’ll first need written plans that your team can execute against. In the case of the woman building the SAAS business, this would include:

  • A product plan demonstrating which features would be necessary for enterprise clients to pay higher fees;
  • A marketing plan illustrating how the company would develop awareness for its product;
  • A sales plan showing the output of the sales funnel;
  • A hiring plan mapping new hires required to execute on the product, marketing, and sales plans;
  • Cash flow projections detailing what the money raised would be used for.

4. Execute

Once you’ve completed all the planning, you’ll need to execute on the 3-to-6-month plan, albeit with limited resources. Your goal is not to demonstrate that you have all the answers or that your success is a certainty, but rather that your business is indisputably moving forward.

5. Stay In Touch

When I set about to raise money for my first startup, sixdegrees, I spoke with over 200 high-net-worth individuals– all of whom rejected me. But I was clear with them about what I intended to accomplish, and most of them agreed to receive updates from me on my progress.

6. Have Patience

Because I left each investor meeting with a plan for my company’s growth, investors were able to measure my actual metrics developed over time against my initial projections. I predicted that we would build an MVP. And we did. I predicted that we would get 1,000 members within the first month after launch and then 10,000 members a few months later. And then we did. Some of the original people who rejected me ended up financing me later on.

The ability to create momentum is what separates the people who start businesses from the people who don’t. It’s also the trait that outside investors will find the most impressive and confidence-inspiring. Make sure to have the right perspective when you start meeting with potential investors. Don’t expect them to give you a check before you leave the meeting. Your goal is to get your audience excited to track your progress, not to hand you a check after a presentation.

First-time entrepreneurs frequently ask my advice about when they should start meeting with prospective financiers. My answer is almost always the same. You are ready to start when you can: 1) identify a grand and worthy vision; 2) predict a trajectory for your growth; and 3) share marketing/sales, product, and financing plans that will enable you to get there.

When you embark on the financing process, you should expect it to take at least 6 months. If you can build an audience to watch you rack up those 7-minute miles, you’ve got a good chance that somewhere along your run, some of them will be willing to bet on an amazing finish time for your marathon.

– Andrew