Ahh yes, butterflies in the stomach, sweaty palms, emotions at the tipping point with apprehension, and way too much cheap cologne. As you are waiting in the foyer you think to yourself, “I’ve been in this situation before, but where?”, and then it clicks; “Oh no! Its like I’m reliving my first date all over again!”. Just as soon as that frightening epiphany shatters any thread of confidence that remained, the doors open and you recognize the hurried and intimidating face from the LinkedIn photo of your first prospective investor.
Speaking from my own experience, this narrative accurately describes my first investor meeting. I was in way over my head, hadn’t prepared myself correctly, and was sick with apprehension. Luckily, the investor was kind enough to give us feedback on our presentation and agreed to a follow up appointment. If only dating worked out that way!
First dates are famously amongst the most awkward moments in all of our lives and one that we are usually grateful not to have to relive. The reason? Because it is almost certainly a failure of epic proportions. But as entrepreneurs, we know and are frequently reminded to learn from our failures, fail fast, and apply what we have learned.
So with that in mind, I have compiled a list of the seven things my first date taught me about raising capital.
1. Be Prepared
No, I don’t mean using your Dad’s aftershave, getting a rose, and practicing your into over and over in front of a mirror. However, what I mean by be prepared follows the same principle. While smelling like Brut and having a rose in hand may not hurt your chances at getting a follow up meeting, it will not get you any closer.
Prepare yourself by knowing the problem your business solves, how it solves it, what its strengths, weaknesses, opportunities, and threats are, and how it is going to make you and the investor money. Know your market back to front, and perhaps most importantly KNOW YOUR INVESTOR! Be honest, you
facebook stalked did your homework on your first date, so why not do the same with the person who may very well fund your venture?
2. Don’t Over Prepare
Wait a second, didn’t I just spend 2 minutes of your time talking about the importance of preparation? Yes, but as with all things, moderation is key. The truth is, you can never be completely prepared for what may happen on your first date or the many questions your investor may have. Don’t let an obsession with preparation turn you into a data vocalizing robot, and most importantly, be ok with the fact that you are not prepared to answer everything and that you may have to get back to your investor on a certain question.
3. Be Yourself
Building off of item number two is the always important motherly reminder to “be yourself”. In dating, the pressure to be somebody you’re not is almost impossible to ignore, but it is even more difficult when meeting with investors who have ten times the experience you have, and chances are, they could do a better job at building your business than you.
But listen to your mother! Be yourself, because relationships, like investment partnerships, are taxing, long, and bring out your true character. More importantly, however, is the fact that decisions, yes, even large scale financial decisions, are made on emotion and instinct. If you are hiding your true character, you make it impossible to connect on an emotional and instinctual level.
4. Its Not Rocket Science
Adding to number three, investment isn’t rocket science. The pressure to make your first date like you is as sure a backfire plan as any, and many times we forget that relationships are forged when two people simply like each other enough to share their life with each other.
While you may not be sharing all aspects of your life with your investor, you will be intimately involved in all things relating to even the most minuscule and complex issues of your business. While some of these issues may be complicated and over your head, it is important to remember from the get go that you won’t be working on any complex issues together if you haven’t first taken the time to get to know and mutually respect each other. So relax! Initially, forming a relationship with an investor is done the same way as any other relationship.
5. Don’t Rush It
We are all guilty of this, especially in the hormone filled world of dating. Planning what color the nursery will be for your child when working up the courage to say hi to the person you want to date might be a little much, and is sure to make you a nervous and twisted mess.
When first reaching out to an investor, rather than asking them if they would like to invest, ask to take them out to lunch or have coffee. Get to know them, find out what makes them tick, how they got to where they are now, and where they plan to be down the road. Not only will you learn from what they have to say, but you will also get a solid idea of whether you want to establish a relationship with this person.
You would never propose marriage before going on a date, and so it is with investment relationships. Take your time, and let things evolve naturally.
6. Think Long Term
Although it may seem that I am contradicting my earlier point, let me remind you that the body cannot go where the mind has not already gone. If while on your first date your date mentions that he/she has occasional violent fits of rage and has 25 cats that he/she calls her children and dresses up in themed Holiday costumes, you may want to reconsider the outcome of the relationship; unless you like violence and cats. If that be the case, then Eureka!
My point is, we should always be paying attention to the present in relationships and analyzing whether the current trajectory is in line with our ideals. We would never get married to somebody we dislike, and similarly, we should never establish an investment relationship with somebody we don’t like. Live in the present with your eyes cast towards the future, and don’t be afraid to cut things off early. Remember, fail fast.
7. Follow Up
Finally, perhaps the most important point. Let’s say you just had the first date of your life. You share the same interests, didn’t drool on yourself, and your date didn’t snort when they laughed. The last thing you would want to do is to drop your date off without agreeing to see each other again soon. If you do, you may end up texting later that night, and we all know where that can lead…
Where was I? Right, following up.
So when your fantastic first meeting is coming to a close with your prospective investor, DO NOT forget to set a follow up appointment. When conversing, keep track of to-do items on your end or questions to find an answer to and tell your investor that you will have those things taken care of by next week and that you would love to go over those with them at that point.
Don’t Worry, You Got This
So if you could take one thing from this, it would be to relax and realize that you have been doing this your whole life. From your first friend on the playground, to your first date, to your first investor. All of these relationships are established on the simple fact that two or more people find it enjoyable/beneficial to associate together. So relax, put your trust in your preparation and enjoy making a new relationship that will provide you the capital you need to make your entrepreneurial dreams come true.
Hello everyone! I hope you all enjoyed this informative, entertaining guest post from my friend Jonathan Lee, CEO of Hotlap.co. He has put in extensive time working with investors to get the Hotlap.co app in the works. He’s a gentleman so he didn’t mention this in his article, but Hotlap.co is one of the top competitors in the Vesto competition to win $100K. If you enjoyed this article please take a second to vote Hotlap.co through this link, Vote Hotlap.co,to help him out!Voting ends June 21, 2013. Below is a video that explains their mission.