Greetings from unusually chilly Hermosa Beach (anything under 70 degrees is freezing to me). As tormented waves crash into the cool sand behind me, I thought now would be a good time to post a column on how to deal with potential investors. I hope the promise of the New Year has doused you with enough optimism and relentless fervor to capture your dreams in 2017. While such a feat may seem next to impossible, at least you’re standing right next to “impossible,” instead of being light years away from it. So, whether you have a start-up, a film project, or any other soon-to-be-multi-billion dollar idea, this article may help you get to your goal sooner than you think.
Today we’re discussing three things you can do to save time when dealing with potential investors. While there are no blazingly quick career routes to take, knowing what path not to journey will save you months of anguish. Thus, here are a three ways to save time on your quest for securing investment money for your undoubtedly fantastic project.
“No” Usually Means No – Until Other Major Investors Validate You
I’m always amazed of how many entrepreneurs keep pursuing potential investors after they say “no.” Week after week and month after month, relentless movers and shakers in waiting keep bothering potential investors with information on their most recent developments. However, rarely do investors change their mind (unless the new development is a “game changer” that makes the investment a slam dunk. Thus, it’s pointless to waste time on a gun-shy investor. Even if they are a family member or close friend, and you’re sure you can eventually turn their “no thank you,” to a “where do I sign,” situation, it’s still a better use of your time to pursue people who actually want to invest. Remember, once you get others to invest, you can always go back to investors who passed on your project and ask them to reevaluate your investment opportunity.
Give What Your Investors Are Requesting, But Nothing More
One of the biggest mistakes I see entrepreneurs make is giving investors more information than they asked for. While they usually do this as an act of ethical transparency, giving more information than is asked for is dangerous, because you don’t know how that information is going to influence the decision making process. Furthermore, providing too much information extends the time needed to evaluate your offer, and makes it much harder for the potential investor to find the information they requested in the first place. That situation may be detrimental for you, because once you frustrate a potential investor; you will almost surely lose any chance of securing an investment for them.
(Most) Investors Like Repeating History, Not Making It
The smartest path to willing investors is to focus on those who have invested in the past. You should study what your potential investors have backed financially, because most investors key in on few areas. Investors usually devour, absorb and ultimately master every aspect of the area they like investing in, and so they rarely invest outside of their comfort zone. So, it’ll be far easier for you to approach investors who have a history in the field your company is in. Surely, seasoned investors will scrutinize your plan far more than novice investors, and they’ll be more demanding about what they are to receive in return for their investment. But, those are small prices to pay in order to get your dream financed.
Okay, that’s what I have for you, but first, here a funny investment video.
And here’s a link to my podcast:
As always, I thank you once again for lending me your eyes, and I look forward to borrowing them again next soon.