This is a question I have been asked dozens of times. I have been pretty fortunate and had a great deal of success as an entrepreneur in raising money, and many of my friends, colleagues, and entrepreneurs in waiting have asked me, what does it takes to get investment? Other that knowing someone or doing it once before (that is the easiest way), how can a “nobody” get somebody to invest in your bright idea? There are not a lot of things you can control when it comes to funding, but here are some tips YOU can do that seem to work for me, and hopefully for all those budding entrepreneurs out there as well!
It’s all about the sizzle…you are selling smoke and smell, not steak!
OK, being in Texas for most of my life (but not a native), I have learned a lot about cattle, steak and sizzle. You want to make their mouths water. When you are “selling” your idea, you have to think more like a televangelists and an engineer, CEO, or businessman. Essentially, you are selling something intangible that will get a return in at a future date!! Hum, sounds like salvation to me. Not to be flippant, but a LOT of what you are selling is your passion and promise of a better tomorrow, which leads me to my next point.
Be Someone Worth Knowing…
What does that mean? Be someone who always offers more advice, skill, knowledge, giving, service and feedback than anyone else you know. As Woody Allen said, "Eighty percent of success is showing up." The other 20% is in differentiating yourself from everyone else. As I like to say, “Differentiate or die.” Whatever your expertise is, just make it so that you are THAT person people want to know, meet, and network with. When people ask me what I do, I tell them I am in the business of humanity, I live vicariously in helping others. Helping others reach their success is vitally important to me, and sharing of yourself will make you important to others.
Do NOT network, collect… people.
As I said earlier that I was in the business of humanity, and as part of that, I make it my mission to not only be a person worth knowing, but in also collecting people worth knowing. I believe the greatest ability to possess is the ability to find, develop, and promote abilities in other people. I stay in touch with some individuals because they are friends or because we run in the same circles, but I collect other people because they are either unique in some aspect or I feel they going places and I want to make sure they know I am here to help THEM. I make it a point to stay well associated with them when they get there (mostly because I want to go to their great parties). Going back to being someone worth knowing, makes these connections more viable.
Great opportunities start with the unknown
I say “Go to where you do not know what you do not know. That is where you will find all your opportunities.” It is as true for business as it is for people. When you network, go to events that you would not think twice about going to, and talk to people YOU DO NOT KNOW. Not only will you expand your knowledge (be worth knowing), you just might meet someone you had being wanting to meet for some time, but did not know it.
You are the average of the 5 people…
When doing a start up, your chances of success increase dramatically when you associated with a handful of competent people instead of hiring a bunch of mediocre ones. Just as important, the people you associate the most with, your favorite 5, will dictate your odds of failure or success outside of the business world. If you are not getting to where you want to be, look at the people you are hanging out with. You do not want any drama in your life, so "if you want to lift yourself up, see who is bringing you down, and get rid of them.”
Do things with flare…
If you want to be someone worth knowing, you have to do things not just above and beyond, but with a sense of flare. No one remembers average, but they do remember someone who went out of there way to make a connection, or get some information, and give a piece of hard to find information. Just wondering how many of you make a conscientious effort to remember every person’s birthday in your address book, and send them a note on it? Hum, not many I am sure. To be outstanding you need to stand out, and to stand out, you have to make the effort.
Manage your time…
It is the most precious asset you own, do not let others rob it from you and do not waste it needlessly. I am NOT saying you should not have a social life, you should, but if you are wasting time involving yourself in other people’s drama or watching Netflix marathons and partying it up regularly, it will be difficult to find the time to focus on doing the hard tasks at hand. Denis Waitley said it best when he wrote, “How you spend your time is far more important than all the material possessions you may own or positions you may attain.”
Do only work that is important….
I have a quote that I tell most newly minted entrepreneurs, “Do only work that matters, and you will end up pleasing those who are important enough to care about it.” What this means, if you try to please everyone you will most likely fail, and those people you want to please, may be your potential investor. Stay focused on what you KNOW is important, and figure that out BEFORE you start doing any work. As a corollary to this, Stephen Covey’s quote adds, “Most of us spend too much time on what is urgent and not enough time on what is important.” And once you figure out what is important, do excellence in it.
Put in the work in…
From what I’ve seen, investors want to see entrepreneurs that have put a lot of effort into their business before approaching them for money. Doing a side project or just having an idea is not going to cut it. You may not have a lot of money to spend on your start up right now, but you do have time (see what I said about that earlier). Use that time to become a subject and market master. You will never know everything, and potential Investors will ask you hard questions, but in the land of the blind, the one-eyed man is king. Believe it or not, you are alright to say “You know what, I did not know that. Let me do a little research on it and get back to you.” Of course, if you say that too much, you will just be disregarded as any kind of subject master. Make sure you got your knowledge of the industry, competitors, revenue models, and other businesses that have been successful and failed in your space. Have a well thought out go-to-market strategy understanding your sales channels and how much and who you need to help you scale rapidly. As I also say, it is good to know what makes you different or better. As far as selling sizzle, having a huge market size never hurts either, especially if you have a chance of "gaming the system."
Persistence, persistence, persistence…
My last little piece of advice might be the most important. You are going to be turned down dozens, maybe hundreds of times. By being persistent, and often thinking "outside of the box" on funding or financing, you will hit that right combination that is appealing to an potential investor. Remember not all investors want the same thing, and if you REALLY believe in what you are doing, you will will find that “one” person who believes too. As the old saw goes, “it only takes one person to get you pregnant.” Good luck friends and see you…out there.