Raising money is hard. Investors work hard to earn their money, and you want them to just give it away because your idea is the best one ever. How could anyone not see that?
If you want an investor to say yes, perhaps you should offer them something they actually want. Tweet This Quote
Then, you can’t believe it when an investor says no. They won’t give you their money. They don’t seem to see the brilliance of your idea. Another rejection—why does this keep happening?
In my career, I have sat on both sides of the table. For many years, I sat on the entrepreneur’s side, begging for money (or so it felt) from countless investors. In the second half of my career, I have sat through hundreds of presentations on the other side of the table, with people asking me for money.
Most of the time, the script was the same. The entrepreneur tells the investor, “I want to build this product; I want to lease this office; I want to hire these people…so please, just give me your money.”
Here’s the secret: think about investors like customers. Tweet This Quote
Really inspiring for the investor, right? As entrepreneurs, we are focused on what we need and what we want without giving thought to what the investor needs, wants or is looking for.
Here’s an approach you should try: think about investors like customers. When you search for customers, you dig deep to find out who they are, what they want, and how they like things to be presented to them. Why not treat investors the same way?
How to treat investors like customers
I was launching a startup, building a travel technology company. I had been rejected by a few investors in a row. Then, I decided to treat investors like customers and thoroughly research them. If you want an investor to say yes, perhaps you should offer them something they actually want. My goal was to find an investor who was specifically looking to invest in travel-related technology startups. Here’s an example of what I did to figure out what they wanted.
- Make a list. I began by searching online for companies that I thought were most similar to mine. I googled “travel technology companies” and made a list. If there are no exact matches for the type of company you are launching, just find the most similar.
- Do your research. Then, I took that list and researched each of those similar companies individually. I looked to see which ones got investments. For those that had successfully raised funding, I searched to see who funded them. An interesting thing happened—I found the same investor’s name on more than one of those companies. Instead of meeting with investors and hoping they might like my company, I now had the name of an investor who I already knew liked this kind of investment.
- Do some analysis. Next, I took the names of the companies this investor had invested in, and I tracked their progress. I wrote down which of his investments had performed well and which had failed. Then, I made another document, where I spelled out why my investment was similar to the ones he had invested in that succeeded and how my company would avoid making the mistakes of the companies he backed that had failed.
- Make a human connection. Lastly, I did some background research on the investor himself. I wanted to know more about him as a person and learn about his interests. The goal was to see if we had any shared outside interests or hobbies. We did. I wrote those down, too.
- Make your pitch. Unlike my previous investor meetings, this one went great. We chatted about our shared interests before we jumped into the presentation. Investors are people too, and like the rest of us, they would rather do business with someone they enjoy spending time with. Then, we started the presentation. It went great because I didn’t start by telling him what I wanted. Instead, I started by reviewing what I thought he was looking for and that I was here to help him achieve his investment goals. The deal got done. We even became good friends.
Investors are people too. Like the rest of us, they would rather do business with someone they enjoy spending time with. Tweet This Quote
Try thinking of potential investors like customers. Focus on their needs, not your own. Start your pitch with an explanation of why your investment is a great fit for them, and how it will help them achieve their goals—not yours. You may just have some amazing results.
A version of this post originally published on UNREASONABLE.is in February 2014. It has been updated and reposted to inspire further conversation.