As an entrepreneur, you’ve poured passion and determination into your business. Reaching the next level means raising capital and finding investors who believe in you and your vision. Most rely on plans and projections as the foundation of their pitch, but my next guest is telling us we have something way more powerful, our stories. Welcome back to the Author Hour Podcast. I’m your host, Hussein Al-Baiaty. My next guest is Steve Distante, who’s here with me to talk about his new book called Pitchology. Let’s flip through it.

Hello, everyone. Welcome back to the show. I’m here with Steve Distante. I’m super excited to have him with us today, because he’s going to be sharing some really exciting stories and experiences around the art of raising capital. Steve, thank you so much for joining me today. I really appreciate your time.

Steve Distante: Thank you, Hussein. Pleasure to be here.

Hussein Al-Baiaty: Yeah. This new book Pitchology, I’m really excited to get into, because most of our listeners are in that space of entrepreneurship. They’re in the space of always elevating their credibility and who they are around their niche markets and what they’ve mastered over time. I’m super grateful that you’ve brought your wisdom to this book. I really want to give our listeners an idea of who you are, where you grew up. I know you have a really funny, interesting story that you started us off within your book around selling manure, but I’ll let you share the beginnings of your entrepreneurship journey.

Steve Distante: It’s so funny people like to hear that story. I’m one of five. I’m the middle child. I grew up right near some horse trails. I used to get up in the morning and go to a little bar and Little Red Barn behind my house. At six I’d have to pull this wheelbarrow up the hill with my pitchfork. There would be a nice hot steamy pile of fresh manure, I’d get like two, three, four, fill up the wheelbarrow just a bit, bring it down. Then I’d run into one of my neighbors. It was my way of being able to communicate with them—entrepreneurship, selling them something. It was $1 a load. Miss Barker was my best customer. Her sparkly eyes, she’d hand me the dollar. You have food for my tomatoes. As the story goes, I’ve been selling shit ever since. I was six years old. I’m an entrepreneur all my life. Again, it’s my way of communicating with the world, if you didn’t realize that most entrepreneurs are introverts.

Hussein Al-Baiaty: Yeah, for sure. I very much caught the entrepreneur bug at a very young age, selling euros at a Saturday market with another Egyptian guy that my dad met. I definitely got —that’s how I was able to start talking to people. I was very young. I was like 13 years old, but I just love that. The early start to how we think about ourselves and how we value ourselves is very interesting. Who did you ideally write this book for? Who are you specifically trying to help with your message?

Steve Distante: In the circles I’m in, we call that “who do you want to be hero to?” I want to be hero to my fellow entrepreneurs. I want to demystify money for them so that they’re able to not only raise capital, extract cash out of their business, maybe exit or so, but know what they’re getting into. I made this book for them to be able to share. It’s funny, Hussein, I have said this, and people have given me good feedback on it. It’s the reality of things. I didn’t know people didn’t know what I knew. That’s just funny. I wrote the book on it, because I enjoy being able to empower entrepreneurs to raise capital, but holy cow, this has been explosive for me.

Hussein Al-Baiaty: That’s wonderful. I love that you brought that to the table, but you have a wealth of knowledge. I mean, you’ve been an investment banker for quite some time. How did you get into that world? What led you into this new understanding of how entrepreneurs can get funding? Can you talk to us a little bit about your investment background? How many different types of people you’ve helped before? What are the typical things that you looked for when you were trying to help people in that world?

Steve Distante: Well, it starts with me wanting to be, I’ll start where I was in school to be an actuarial science, major stats and so on. I came home. My dad had this rule at the house, which was if you’re home [and] you’re not going to college, you got to pay rent. I do anything not to pay rent. I had many jobs, but then I decided to go to school a local community college. I met a professor, Professor Francis Purcell. He said, “Accounting is the language of all business. If you get this stuff, you can understand any business.” They didn’t have entrepreneurship programs when I was going to school. I decided that was going to be my chosen profession for a short period of time, my major, but just to be able to understand.

I moved on, graduated from St. John’s. I ended up at a firm at the time was called Deloitte, Haskins and Sells. I was part of the Big Eight. I don’t even know how many bigs there are nowadays, but I know Deloitte still exists. It was like the best firm you could possibly go to. I used to do audits. It was interesting. I had so much life experience, compared to the other accountants who are working there. They haven’t even had jobs. I knew how to run an X tape and a Z tape on a register, because I was working throughout my years, learning, just picking up information all along. That’s what I’ve done.

I ended up breaking away from the big eight. I went to a small firm and ultimately built an accounting practice, but then an accounting office where you go get your income taxes done, but I had 33 tax offices and did about 37,000 tax returns a year. I didn’t do one of them. I could, of course, but I started to build that along with financial services investments in such side as well. Over the years, I’ve acquired three broker-dealers to RIS or Registered Investment Advisories. As Michael Gerber says, who’s in my book, I work on my businesses, not in my businesses. I have an amazing management team, led by some wonderful people. One of which is my wife, who’s the CEO of the company, that allows me to do things like this, write the book.

Raising capital, I’ve been—it’s not a popular phrase, but the truth of the matter was, instead of Pitchology, it was supposed to be called Pitch Slapped and that word, but I almost got slapped for saying that. It wasn’t to be derogatory and it had been construed as derogate to women. I said, “Oh, man, I would not want to be derogatory to women,” so I changed it to Pitchology, but Pitch Slapping is when, I mean, most of us, especially if you have a little bit of money have been approached by people looking to have you listened to their pitch, and then invest in their company, and they don’t listen. They don’t listen.

At my firm, I’ve done capital raises for companies, where I’ve helped do the due diligence, which is I actually go out, meet the team, understand the product and so on. One of the ones that really turned me on to the idea of doing a book on this was a company called World Tree, and World Tree grows the world’s fastest-growing trees. They grow in about 10 years and draw down about 11 times the carbon of any tree on Earth. When you cut them down, they grow back from a stump. We did about 10, definitely no capital raise for that is like one of my fun projects. It was an impactful project. I did a VR pitch film for them, where you actually went to a woman-run farm who had these trees. In VR, virtual reality goggles, you could look around the farm. You can see what they’re doing. It was just a visceral connection to what they were doing.

I realize that on these pitches, what happens is people fail to talk about the most important thing than their journey, their failures. Everybody tries to just project out these next 20 years. We’re going to make a half a gazillion dollars. They think that’s what’s most important. The reality is, that’s not the most important thing. People want to know who that entrepreneur is, and are they connected to the project that they’re doing? Is this the thing that their life wouldn’t feel complete unless they actually did it? That’s a real really big part of what compelled me to get into writing a book about this. Being exposed all the different modalities and the people that very much part of why this was done the way it was done.

Why You’re Doing What You’re Doing

Hussein Al-Baiaty: It’s very powerful man. I really love all the stories and all the experts that you brought in and interviewed throughout the book. I want to know, for example. I’m an entrepreneur, and I got an idea of cooking up or I’ve been cooking one up for a couple years. I’m ready to get some more money, because I know, I’m tapping out of my cash flow. What would I do next? What’s my next big thing that I would need to start preparing a pitch? Where do I start? What things do I need to gather that I can bring to the table in hopes to raise some capital?

Steve Distante: Hussein, that’s a great question. People want to know how much you believe in your idea. People want to know, what your confidence level is on this, or you just want OPM as Danny DeVito call that, Other People’s Money. So in that, there’s two questions I’d ask. The first question is, and you don’t have to answer these. It’s just for illustration purposes. Is this your first time being an entrepreneur or is this adventure? Are you a proven capital entrepreneur and this is a capital raise for a new concept for you, and you’ve already had success in business?

Those two questions are important, because the person who’s been an entrepreneur had a successful exit, had a successful business, has been a seasoned entrepreneur is more likely to take a concept and then fund it out of the gate or spend some of their money and then do a capital raise, but the budding entrepreneur who’s never done anything before, who’s looking to come to the table and say, “Hey, I want to raise some capital. Here we go.” They’re typically going to do their own money, then friends and family, maybe an angel, maybe a crowdfunding, these are the easy, low hanging fruit, or there’s something tied to that as well, which is, if you’re willing to go to friends and family, that means you get it, you understand, you’re confident, or you’re a criminal, which we hope you aren’t. You’re willing to put your reputation with those loved ones around you in order to get to the next level.

Hussein Al-Baiaty: I love that, because it frames it in a way that is like, if you can show your competence, you show that you are committed to this service, or product or thing that you’re trying to do. They’re really investing and it sounds like in who you are. Which is where the next part of my question comes in, how important is your story? I know you really harp on that. Can you share a little bit about why that story that you bring to the table is almost just as if not more powerful than statistics or projections that you can outline? Why story is so powerful?

Steve Distante: Yeah. The first question is, in your story, why you’re doing what you’re doing? If it’s to make money, well we’re not interested. If it’s because I had a child who died of —and this is a horrible story— but I’ve heard it over and over again, because of something that wasn’t correct, and I develop this process in order for no other parents to ever have to go through this. I’m interested in that story, because that’s from the heart. That’s the kind of person who will never, ever allow failure to get in their way. The money is going to be able to help them to get to that next level, if they can demonstrate it.

The ‘Why’ is really important. The ‘Why’ you’re doing what you’re doing, but then also the vulnerability, because there’s no better tuition, we’ll call, it then losing everything, or losing to something that you’ll never do again. That’s the tuition when you get hit with a big lawsuit or whatever it is. That vulnerability allows us to understand your story and where you’re coming from. Typically, from those sorts of circumstances, you come out stronger, you will not repeat that episode, and you’ll be more responsible or more aware, or more cautious, or whatever it might be. Those stories really have a lot behind them. Unfortunately, people like to show up in the Sharkskin suit with a nice tie and however they’re trying to do is to pitch and come off as this Titan, this Gladiator and that’s not what people want to know. They want to know you. That’s really what they want.

Unicorn Hunter

Hussein Al-Baiaty: Yeah. That’s so powerful, right? Because it’s that ability to trust, right? I think once people get to know you and understand that you are trying to work through those weaknesses or whatever they may be, right? You have been sued before, in my case, I’ve been fined by the NBA making T-shirts like, so I understand that. I’ve carried these things as an entrepreneur, as a person who puts their creativity on the line. Your willingness to go to that edge and figure out what you can’t do, what you can do, what you’re capable of. Again, that’s how I discovered how I was able to like, “Oh, I got to hire somebody for this.” Because that is a weakness that I’m not going to go invest three, four or five years in accounting, right, to really sit down and figure out every aspect. Maybe I can just team up with somebody who has that accounting degree, or whatever, just has that experience and expertise.

I think for me, when I looked for people to help me in my business. I certainly went to friends and family, but I was very particular. I think it was about not only able to trust them, but it was, what else are they valuable at, so that I can seek guidance as well, right? It’s like, I know, you can manage my books, because that’s what you do for a living, and you’re helping me out, especially as a startup business, or whatever and you’re going to help me with $1000 bucks to get this thing or that. I also want to know how I can really get better at my financials as I grew up.

I think having that guidance is so crucial. I think, you’re right, other people’s money is great to help build the thing that you’re doing, but it’s also really, can that person help you grow as a person, as well? I think for me, that’s always been a thing associated with money is can this person mentor me? I love that idea. You took it home for me. I just was able to connect. You talk about these different types of angels, right? Family, friends, and then you got the venture capitalist, which you call Unicorn Hunters. Can you go a little bit deeper on what a Unicorn Hunter is?

Steve Distante: Yeah. I’m looking for companies that are going to value exponentially. They’re looking for that next big thing. So that was an adventure capital, typically, they’re going to take about 20% position in the company. They’ll likely advice. Similar to what you were just saying, which is, what else do they bring to the table? They’ll be able to bring relationships. They’ll be able to bring guidance and some key elements that you might be missing as an entrepreneur. Unicorns, though, are companies that will grow by 1000 or more 1,000% or more. They’re looking for those big hits. Typically, in venture capital, it’s accredited investors that are investing, which means wealthy people are super accredited investors that are, and this is risky money for them, but the person who puts together the venture capital portfolio is risking their own money as well, in order to be able to usually over a five year period, outcome in a particular area.

It could be health sciences that say. I know we talked to Will Wiseman about that inside. Just to reiterate what you had said, I want this book to be a multimedia experience for entrepreneurs, so that not only do they get to read the chapter, but how do I get you interested in actually reading the chapter. We put a QR code, or two or three in each chapter that goes to a podcast, and to YouTube, same content, but if you like to look at it, or if you’d rather listen to it, but then I’m doing it on Audible also, and the audible is just going to be just the book. Still, those podcasts are going to be extra information on a particular topic where I get to collaborate with people, and talk to them a little bit about that.

Back to the Unicorn Hunting, you can actually listen to Will Wiseman talk about his VC Fund and how he does it and how it’s put together. I really to ask the tough questions, because when I’m doing these I’m coming from a novice position, not that I am a novice, but I want to ask this to get it down to its most basic terms, so that anybody could listen to this and understand what the hack VC Fund is, an angel investor is, and so on.

Hussein Al-Baiaty: That’s amazing, man. Can you share with me a little story about a company that you believed in, and maybe they pitched you something and you really believed in, but maybe they didn’t have the right, X, Y or Z perhaps. Then you gave them some guidance. Then maybe they were able to come back and you’re able to fund them. Something along those lines like a story that highlights, not only what were you looking for, but somebody that is actually listening and what they do to come back and get funding. I think that’s for me, it was like multiple tries, right? But it’s always refining the pitch a little bit more, right?

Steve Distante: Yeah. There’s this next gen group, which is 50, 60,000 young entrepreneurs and they had approached me with a safe note, simple agreement for equity. The way they were pitching it really didn’t make a whole lot of sense, that there was no clarity on exits. I’m a big person on exits like, how do I exit from this? There was no clarity on the benefit of collaborating with them. If you read the chapter on collaborations, which is based upon some conversations with Dan Sullivan from Strategic Coach, that is one of the most wonderful things is collaborations. Back to next gen. When I was speaking with them, they were looking to raise capital. They were doing it in a way that almost felt not for profit-y. The reality is they are a for-profit organization.

The way you reposition them was to go out into the marketplace to find people who they would align greatly with, very much like you were saying, Hussein. What can this investor do for me? That became the most, easy thing for them when they readjusted their focal point, not from going to people just to raise capital and hope they’ll be happy with the potential of making money in the future, but who aligns with your values your mission? How could they benefit as well from a collaborative perspective? Next gen, readjusted, and there are people lined up to be able to speak with them. Once they did that, it just made it that much easier.

Hussein Al-Baiaty: Beautiful, Steve. That’s the thing with me. It’s like, understanding how you can improve what you have going on, on the table. When you bring those conversations, the things that you need to work on are always apparent. I think but it’s getting through that fear, stepping into it. I think it’s really powerful that you brought that story up is brings me to my next idea is like, there’s crowdfunding now is huge. I know you mentioned this in your book, which is beautiful. It’s a thing now, especially happening with young people, young entrepreneurs, perhaps. I know it’s very difficult to crowdfund, because the economy and audience, you need a group that really believes in this product or service that you’re trying to pitch out in the world. to do it right is very difficult. Can you share some insights around how you potentially or people that you know have approached crowdfunding for successful swings?

Connection and Uncovering the Need

Steve Distante: Video. Video. Video. Let’s make sure we got some video. I think you might know I’m a documentary filmmaker, as well. Video is always going to be king. Interesting, I was consulting with somebody who shall remain unnamed at this moment. You’ll understand in a moment why. I was looking through the pictures and they were all blonde, white people. There was zero diversity on their race and their race was crashing. I said to Joe, “Look who’s on the screen, like who does this relate to?” The person happened to be blonde and white. The truth is, DEI is very near and dear to my heart. I’m an ally to many people. In the entrepreneurial world, I belong to a group called EO OneWorld, The Entrepreneurs Organization OneWorld.

Back to your question about crowdfunding. Crowdfunding is for regular people, non-accredited investors to be able to get invited into something fun. Everyday like Shark Tank, and being part of something and to be able to early order something, support an entrepreneur. The Crowdfunding went through an interesting history, I believe. It was Oscar Jofre, who I interviewed for this, who really gets deep into some of the history, but the truth is Reg CF, which is Regulation Crowdfunding was started under the Obama administration.

The idea was to be able to raise capital in a non-regulatory environment, where you’re out there not getting hit up by the SEC, and FINRA, and having to jump through all these hoops for very expensive startup costs to be able to do the raise. It was a million dollars when it started. It took like 10 years to get to a $1,000,070 or eight years to get to a $1,000,070, which is nothing in the world. It’s been increased recently to $5 million. It makes it a viable way of being able to raise capital and as Stephen Covey used to say, “Start with the end in mind.” You’re absolutely right, if you don’t have a good following. How do you get the following before you actually do the crowdfunding? Because doing the crowdfund is not going to be the way to get your following. It’s quite the opposite.

Once in a while as Unicorns as we use that term in another part here. Once a while is Unicorns that have something so unique, so different, but the reality is you do need your following, and I’m going to give you an inside scoop here. I know for a person who is just doing a million dollar raise. They were working with a couple — with a platform which charged them five or 6%. Let’s say it was five, would be fair. They were working with a marketing company that was charging 8%, so up to 13%, right? Their goal was to raise a million dollars. They needed them to spend $200,000 in advertising to hit the million dollars. So 200,000 is 20%. Let’s put those numbers together, it’s going to cost this person 33% to do a million-dollar capital raise. 33% are you kidding me? So really careful what you fall into. That is really tough territory.

Sure, if you got to 5 million, and it’s, it’s $200,000. It’s a substantially smaller number, but the reality is, there are some things that we’re not thinking about. Most people don’t – I’m just going to put it this way. I did this because I didn’t realize people didn’t know what I knew and when you put on that accounting hat, people’s eyes gloss over. It’s very — money is important, profit is important. If we’re going to do this capital raise, to what end if it’s going to cost you more money than it actually is worth to you if you don’t have the profits built in. Crowdfunding is a viable way, like you said, we need the following first, a compelling story, a video, good video content, just realize you’re talking to the world. The world is not exactly like you, so you need to be aware of that when you’re putting content out.

Hussein Al-Baiaty: I love that. It’s really powerful. I love that you said video content. I mean, we are in the age of video is how we consume the world, how we get to know one another, because of brand, get to know whatever it is through video. I love that you mentioned that, because I think just the whole idea of documenting your journey that becomes your story. People like to be a part of stories, right? If I’m documenting what I’m working on, my service of business and building up a small audience, and you compel them to help invest in you or whatever it is. I think people want to be a part of those stories. I love that you really brought those together. Steve, what would you say your favorite part of writing this book has been? I know getting the wisdom out can be very cathartic, of course, what’s been your favorite part?

Steve Distante: My favorite part of writing this book is the people I have connected with and the need that I’ve uncovered. I’ve uncovered that the demystification of money is so necessary. Often in an entrepreneur’s shoes, you’re in your place and private equity approaches you or a SPAC approaches you. It’s the only thing you know. So when that happens, where do you go to find out what other sources of capital raising there are? As I went through, as I mentioned, I presented to 350 entrepreneurs as a pre-release event at the Genius Network, great organization. I started realize how much people didn’t understand about raising capital, all the various modalities, but also, and this is a big deal.

These people who I’ve been in contact with and over and over again, having discussions have invested in other companies and don’t know what they did. What I’m doing now is that built a platform that people can subscribe to, and they can put the deal that they went into, and we have a methodology of analyzing their deal, telling them what they were in, and keeping the company that they invested with accountable for what it is that they promised they were going to give feedback. Also understanding what their exit is from that company, because a lot of times people throw something at a company and just forget about it. That’s not a good way of being able to invest your money.

I am looking to build the world’s largest community of private deal investors, so that we can fund some of the greatest deals that are out there and give them some real value from that perspective. People who are reading this book are typically entrepreneurs, typically are looking at an exit at an acquisition at a capital raise. I’m, again looking to demystify all of that for those people, but there’s also sometimes a sequence.

In one of the stories that’s on ESOPs, Employee Stock Ownership Plans. There’s a story of a woman. Everybody knows her. I won’t mention her name, but she sold her company 75% of her company to private equity for $900 million. She gave all her employees two first-class tickets around the world and $10,000. That sounds pretty cool, but the reality is had she set it up as an ESOP an Employee Stock Ownership Plan, and then allowed private equity come in one, two, three years later, whatever it is, likely everybody in her company would be a millionaire or a better. That’s a better story. She would have kept more money in her pocket, because there’s a lot of tax benefits around ESOPs.

I want to educate the world and being able to compensate or reward the people that worked with us, that helped us to take our businesses to that next level, and then some, and give back to them. The truth is, the governments got it all set up that it’s beneficial from a tax perspective. That’s really where I’m coming from. I realized that I become this evangelist for just literacy around funding, literacy around deals that you have done and to be able to help people who are funding do it in a smart way with the end in mind.

Hussein Al-Baiaty: That’s Steve, that’s so powerful. I love that you really brought us home with all these ideas and stories. I think, you’re right, I mean, in the sense of coming at it from the wisdom that you’ve carried all throughout these years and where you started to where you are today. This wealth of knowledge that most people don’t really quite know or don’t understand, or like you said their eyes just gloss over when it comes to accounting. Steve, I learned so much today, I think I’m just grateful to hear your stories and your experiences. What would be like one thing you hope people would walk away after reading your book? What would you hope that they walk away with, once they’re done?

Steve Distante: An appetite to support fellow entrepreneurs in their journey. That’s really big for me. I like that we make money when we sell or we make money in our businesses and so on, but the private investors, meaning going into private investment deals, has been an area that there’s a lot of distrust, and then subsequent to the deal after they’ve actually given the cash, not great communication. I’m looking to narrow that gap and bring people confidence that when they put money in, they’re going to know what’s going on. I can’t insist that the company provides the information, but being put into a platform like I’ve created, will give them that confidence that at least they have a much better chance to try to do it on their own.

Hussein Al-Baiaty: Yeah. It’s very powerful, very powerful. The book is called Pitchology: The Art and Science of Raising Capital for Entrepreneurs. Besides checking out the book, where can people find you, Steve?

Steve Distante: On the web at that’s .AI, instead, that’s the best place to catch us. You can find us on Instagram, Facebook and so on. If you go to the website, you can actually request a book, up until a certain date and then you’ll find us on Amazon as of February 1st of 2023.

Hussein Al-Baiaty: Sounds great. Congratulations on your book. Have a fantastic rest of your day. Thanks again for joining me, brother.

Steve Distante: Thank you very much.