Some time ago, I read two interesting posts about fundraising and finding partners for startups. Mark Suster, an entrepreneur-turned-VC/Knowledge Evangelist, wrote the post on fundraising. The CEC’s very own Kevin Miller wrote the post on startups.
As with much of the literature on fundraising, these posts explore how to develop a compelling business case while convincing people to work with you and give you money. The principles are universal, even if they might need some translation for entrepreneurs in emerging markets—Kinshasha, for example—who lack access to the type of venture funding available in the US.
But there’s one key element of fundraising that doesn’t get as much press, even though it’s the only element over which the entrepreneur actually has total control. That element is attitude. So here are my top four attitudes that I promote to every founder as they’re working with me to get funding:
Maintain a POSITIVE Attitude
One of my go-to mantras throughout the fundraising process (whether I’m the entrepreneur or the investor) is the simple, positive phrase: “it always works out”. Even if an investor wasn’t interested in giving me money, these four positive words have helped me believe that the investor’s rejection wasn’t necessarily because I had a bad business idea. The next pitch would go better.
Keeping a positive attitude gives an entrepreneur more than just the boost needed to make it through those weeks when the customer sign-up numbers aren’t showing the kind of traction investors want to see. It gives him resolve—the ability to keep his chin up in even the lowest of moments.
When I was raising money for my startup just five years ago, I pitched several investors from September to November of 2011. It was grueling, time-consuming, and emotionally draining. But pitch after pitch, I listened to and learned from all the feedback I received.
Whenever I heard the same feedback from more than two potential investors, I was quick to adjust and let them know I’d incorporated their feedback into my pitch deck. And it helped. So whether it’s your first pitch or your five-hundredth, maintain a learning attitude throughout the entire fundraising process.
Phil Nevels, co-founder & COO of Power2Switch, is one of the smartest chaps I know. (His pedigree speaks for itself—he’s a graduate of both Princeton University and the Booth School of Business at the University of Chicago.) Now Phil and I are both pretty good at spreadsheet modeling, but we had metrics in our projections that were esoteric (very few people think in kilowatts/hour, the metric that mattered for sign-up’s in the electricity space). We needed to change the metrics to make them more accessible. So we made the change.
We could have easily been headstrong by trying to make our investors see things our way. But changing our metrics actually made it easier to communicate the value in our business in terms that investors actually understood. Even though we were the experts in our industry, our investors appreciated that we were open to suggestions about how we could best “sell our story”.
Be CONFIDENT in Your Idea (and TENACIOUS in Bringing It to Life)
No one will believe in your business as much as you do. Never forget this.
Investors will throw questions at you that will make you doubt your own vision or idea. Don’t be surprised when they do. After all, investors are out to mitigate risk, and your idea (whether you think so or not) is a risky investment. I’ll repeat this: investors are risk-mitigators.
The only way you can mitigate the risks inherent in your idea is to confidently provide answers to all the questions investors are going to have. Overcome the inevitable information gap. Allay the investors’ fears. By anticipating questions, you’ll learn more about your own space, and you’ll be better prepared to carry on with implementation.
Don’t misread me: attitude alone won’t get you funded. But practicing right attitudes will help you develop strong relationships. And relationships are what you need to sell your promising business idea to the willing ears of the right investors.