Can You Spare A Million…Or Two?
The Top Five Ways to Make An Impact When Asking for Funding
“I made my money the old-fashioned way. I was very nice to a wealthy relative right before he died.” – Malcolm Forbes
You had a great idea, created a business plan, got some seed money from your ‘angels’ (friends and family) and hired a couple of really smart people to help drive your new brand. What’s left? Oh yeah, that green stuff that makes the world go ‘round. The Forbes quote above can seem cynical but if you look a little deeper, it isn’t really about a wealthy relative. Rather, funding your new company is about building relationships.
Assuming you have done research and determined: 1) venture capital funding is the right decision for your company; 2) you’ve chosen the right firms to speak with; and 3) you know what stage of funding fits your needs, asking for funding requires preparation. The following guidelines will help you build a successful relationship when you are ready to make the ‘big ask.’
Do Your Homework – Would you ever invest with someone who knew nothing about you? Not likely, so make sure you are familiar with both the person you are speaking with in a venture capitalist meeting and the firm itself, including how/what it typically funds. It will be obvious if you don’t know them and it will be a waste of everyone’s time if you are not speaking to the right type of funder.
Simplify, Simplify, Simplify – Probably the biggest mistake you can make – besides not knowing who you’re pitching – is getting mired in the details. They expect you to be an expert, but they are most likely not. Talk to them, not over them and avoid jargon. Make it easy for the venture capitalist to understand your business. The worst thing you could hear at the conclusion of a pitch is, “I have no idea what your company does.”
Be Passionate – This seems pretty obvious, but you must show the venture capitalist that you live your brand. If you aren’t committed to it, you can’t expect them to be. Make sure your zeal for your brand is rooted in solid rationale for why others should share this enthusiasm. If a funder can visualize how a brand carries across to the masses, they’ll more likely be interested.
Dress For Success – Non-verbal communication is almost as important as verbal. While it may be tempting to go ‘Zuckerberg’ and appear in flip-flops and a hoodie, keep in mind you are being judged on your ability to market your brand. Your appearance is a reflection of that. You want their focus on you and your message, not your clothing. Do you have to wear a suit? Maybe not, but adjusting your outward appearance to your audience isn’t weakness, it’s respectful and nobody funds someone they don’t respect.
Know How To Ask – The ‘ask’ is the biggest part of the meeting. The person you’re meeting with is expecting it and your delivery will be key to a successful closing. Be ready to ask for how much you need and show how it will be used. Generalities will not work here. Be very direct and be prepared to answer a lot of questions about specifics.
It’s important to know what venture capitalists are looking for in an investment. Obtaining venture capital funding can be risky, but if you’ve got what they’re looking for and you’re prepared, that’s half the battle.