Bringing on a great investor is like gold dust! But, what is it that an investor is really looking for? And how do you ensure you do enough to get the deal over the line?
1. How Likeable Am I?
Investors, unlike gremlins, are actually very decent people. They suffer the same emotions as many of us. They brush their teeth in the morning. They get annoyed at stuff. They have favourite movies and listen to music on their smart phones.
So, why think of them as a different species?
Don’t adjust who you are just because the situation becomes a bit more formal. Let them see who you are, what excites you, and the type of person they will be putting their hard earned cash into. Don’t be a smart-ass, arrogant, big head or know it all. To be attractive you have to be authentic and honest. I cannot stress enough how important this is…
In a previous post, I cited entrepreneurs who tell me how passionate they are about stuff. An investor should not need to be told. She/He should feel it and be inspired by it. Your energy will add the electric emotional spark that leads to a follow up and a deal. I’m not a great believer in being too cool or playing games. Let them feel the spark.
There is a school of thought that entrepreneurs need a work/life balance. To an extent that is true. But, ask many early stage entrepreneurs and investors and they will tell you that the early years need more sacrifice. It’s just a fact…
So, you have to show the investor that you care about her/his money. That you will go that extra mile, drive value, be prudent. I invested in a little startup once where the principals were doing 9-5 in what needed 12 hour days. It died. With a little more sacrifice it had potential. You cannot run your startup like a corporate or from a phone in the gym.
Negotiate enough of a salary to keep the lights on, but don’t ask for filmstar wages right away.
4. You’re not giving away equity
Nothing drives investors more bonkers that entrepreneurs talking about giving away equity. You’re selling it! Always keep this in mind. You’ve created something that an investor wants to buy – stock. Plain and simple. So, respect that and treat them well.
5. Seek Counsel
You do not have all the answers. Trust me… so many situations will arise where you need a good mentor. So, right off the bat, seek counsel and get to know how your investor thinks. This is the SMART money bit. What they bring to the table to boost the business. Knowledge, experience, networks, nous, people etc…
Taking $500,000 from someone and keeping them in the dark is just plain wrong. Your job as an entrepreneur is to leverage all you can – not just the money.
Make sure that you don’t allow things to go quiet before any deal, during it or after it. Voids are not good
Diarise calls, texts or notes. Make sure they have everything they need. Remember they may be looking at 5 different deals at a diligence stage. Keep yourself in their mind’s eye. It hard not to be pushy, but there are clever ways to do it. Imagine it was a boyfriend or girlfriend you really wanted to go out with. You would make sure you were in their face. So, if the chemistry is right with a potential investor, do the same.
These 6 steps will help you build a decent rapport with investors. They will appreciate you and your efforts. A great place to start a long term relationship…