The Secret Third Pillar to Raising Capital

I told you it would be controversial… Hold on tight because you’re about to get hit with some major value here. These are some real Ninja level moves – but it’s such basic Process tactics that it’s insane that more people aren’t doing it and are sticking to the old method!

To WATCH the video on this secret that shows the ACTUAL term sheet, click this link:

So let’s jump right into it:

We got Tommy Salami and Carmine the Closer.

Both are pitching the exact same investor. Both give the exact same pitch. Everything is equal.

Tommy Salami’s the Dreamer. Carmine the Closer is our Rainmaker.

So both get to their “ask”. Tommy Salami, our rookie dreamer, he puts the valuation on the page. Carmine the Closer, he doesn’t. The valuation is mysteriously left out of Carmine’s pitch. Everything else the same.

Then immediately after, they both go for the close the exact same way.

It’s just a valuation, tiny little words on a page right?

But what’s going through the investor’s head when both of these guys are going for the close?

With Tommy Salami, the investor is sitting there thinking either:

A.   “yeah seems overvalued, too rich for my blood” or

B.    “what an idiot, that’s so low, what is he scared to ask for more?” OR

C.    “ok I gotta go back and grill this guy so I can squeeze him on a termsheet”.

Let me tell you what they’re NOT thinking:

They’re not thinking about whether the business is solid, or whether your pitch was good, they’re just thinking you’re crazy or about cramming your valuation down. They’re probably not even listening to you for at least 30 seconds after you throw out a valuation figure. Because they’re working on the math, and have tuned you out.

And whatever the result, it ain’t gonna help your pitch!


Oh and by the way: about grilling you? Yeah the investor’s probably 100 times better than you at negotiation. Because this is probably the 5th deal he’s grilled someone on this week. You’re about to argue over valuation, with somebody who is a lot better than you at valuation jiujitsu. Some nasty investors, they just do this for fun as a show to their subordinates, or to get you in shape so that the next time you pitch somebody you bring your A-game. Others, they’ll say “thanks for coming, really appreciate the meeting” – then literally the moment you walk out the room they take your deck, tear it to shreds and throw it in the trashcan (when repping investors I’ve seen it happen). Our job is to make sure that’s the other guy – not you!


Now let’s get back to Carmine the Closer.

Everything the same. But no valuation. Just “here’s what we’re raising – how much can we count you in for?” It’s a little presumptive, little confident, whatever. But guess what: IT WORKS.

Cause what happens next. You’ve already laid down the ask. You’ve explained the business.

And if they’re not interested, they’re just gonna tell you flat out right now. “Zero. Not interested” OK that’s a valid answer!


Odds are they took the meeting in the first place because they were into what you’re selling, and so you’re gonna get into some Q&A.

And in that Q&A, whether it’s the first question, the last question or somewhere in between, I guarantee you this:

They’re going to ask what your pre-money is.

So Carmine the Closer. He gets the question:

“What’s your pre-money?”

How does he react? Long, stupid explanation that has 100 holes that can be poked in it? Nope.

This Rainmaker whips out the term sheet he just so happened to have in his back pocket, and goes (ladies & gentlemen brace for impact):

“Oh it’s so interesting you asked that, I’d be so happy to tell you, here’s our non-binding term sheet, you can see our valuation here with all the details, this termsheet gets you access to our dataroom so don’t take my word for it, you can just watch a video, see our documents and fact-check everything I just told you…”


You see what just happened there? It’s so subtle but so crucial.

You just got this investor to do so many things at the same time:

1.     They just moved their focus away from the pitch deck & by doing so, they subliminally agreed to everything in it - because now they can fact check it

2.     You just solidified your selling ability… AND financing ability… AND exit ability to them


Seriously I told you this would be worth your while so let’s keep it going & dive deeper into the investor mindset. This is advanced level stuff.

Everyone says, “oh investors are buying into the management team,” which yeah sure it’s true but it’s deeper than that.

What is an investor looking for at this point? Assuming you’ve got your costs nailed down really tight, I wanna know:

1.     Can you sell it?

2.     Can you finance it? AND

3.     Can I make money on it & will I be able to exit?


With that little piece of magic, you just showed me that:

1.     You can sell like a champion. Because selling an investor just like selling a customer. Just a bigger check on a single day.

2.     Lots of business owners can sell their products, but they can’t sell their business. You just showed me you can attract investors, and you’re gonna absolutely crush it. AND

3.     Because you can sell it, and now I’ve tacitly assumed you know your costs, AND you can finance it – then I just bought into the idea that I’m gonna make money on it. And because you sold me, you can sell any other investor. Which means that when you go for your next round, I can potentially exit in a recap because you know how to bring money in. Or stay on for the long run.


Now based on that, who’s more likely to raise?

Tommy Salami with his rookie valuation move, or Carmine the Closer with the new model, next-level shit?


So here’s the real secret and how it relates to the Process: True rainmakers know that it’s not just about the Pitch, it’s about the Process. And the Pitch is just a stepping stone on the way to closing the deal. They carry the term sheet because that gives them the power to shift that investor’s mindset from the pitch, straight to “here’s how you get into DD right now and prove that my valuation is right” just by signing the signature block at the bottom.


So it’s not a “let’s argue in theory,” it’s a “let’s get into the data & see if this is legit”. THEN we’ll talk about a deal.

This makes the investor’s mind think: “hmm, I should see what’s under the hood, might as well, it’s non-binding” and either sign on the spot, or think that you have other potential investors you’ll give that term sheet to, which makes them fear losing this opportunity.

I talk more about this and show you the ACTUAL term sheet in this video:

P.S. – In the video there are also at least 3 cat pictures.  ♥♥♥