Why It Seems Like It Might Be Easy To Raise Money From Investors But It Is Not

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Many entrepreneurs hope to get an investment from investors. When entrepreneurs see interviews of investors on YouTube or social media, those investors often seem very friendly, open, warm and approachable. It is a part of every investor’s job to build a very positive public persona.

Unfortunately, many entrepreneurs find the opposite to be true in one on one situations with many of those very same investors. Personally, from talking to many entrepreneurs, I have found this to be a common phenomenon and I want to focus on this for a second.

To be clear, once an investor invests in your company, chances are that they will always be nice and professional. After all, that investor will be vested in your success. The caveat, of course, is the case in which you do a bad job growing your company. In that case your investors may not be too fond of you either. But for now, let’s focus on approaching investors who have not yet invested in your business, or have not even talked to you before.

The first meeting between an entrepreneur and an investor often happens when the entrepreneur simply approaches them for conversation. Investors are generally nice people. They are professional, and know how to maintain a good public persona. This public persona is a tremendous tool for them when it comes to attracting some of the very best companies to want to take their money.

The problem is that even though most investors only make a few investments per year, they have to see hundreds (sometimes over a thousand) of entrepreneurs throughout that year. From those hundreds of entrepreneurs, those investors must choose only a few
of the very best companies. Seeing a few entrepreneurs if fun, but seeing so many companies can be very overwhelming. Those investors were once entrepreneurs themselves. It is enjoyable for experienced business people to help younger entrepreneurs. But if you are busy, and are seeing hundreds of young entrepreneurs, the enjoyment quickly dissipates, and seeing more entrepreneurs becomes slightly annoying. This is why investors often appear jaded, and answer email messages with one line replies if they reply at all.

For entrepreneurs, the challenge becomes how to reframe the situation in the eyes of investors in order to make them more approachable. The investor shouldn’t get the vibe that you see them as a bag of money and a well of advice. That can come later, but first you must differentiate yourself from the many other young and first-time entrepreneurs who bring little to the table and often ask for help before offering any help or other kinds of value.

There are a couple of common ways to make yourself stand out. First, try not to seem like you will ask for money or advice after just a few minutes of conversation. Investors already say no to most people asking for money, and they don’t want to do it anymore than they already do. When investors see hungry young entrepreneurs, they know that those young entrepreneurs have only one thing on their mind. The issues you discuss with investors must also be stimulating to them. They are people too. They want to be intellectually stimulated instead of having to rehash conversations they have already had with hundreds of people before. Being interesting or intelligent is the simplest way to offer them value.

One good-practice strategy you can follow is to research and find investors who invest in the kind of company that you are trying to grow, and when you can, try to get introductions to those investors. Investors themselves commonly suggest to get
introductions from other entrepreneurs who already work at companies which those investors have invested in. This isn’t an easy strategy because those entrepreneurs may not immediately want to make a recommendation of someone they just met to an investor, but this is precisely why investors want recommendations. They must create a barrier to access to them because they need to make sure that their time is spent only talking to entrepreneurs who are growing great companies.

More Fundraising Strategies: Try My Fundraising Book

This blog post is just one section from my full book on raising money. Here is the full book with fundraising ideas on Amazon.

 

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