Cour·age — the ability to do something that scares you.
How many of you get nervous if pressed for answers you don’t really have when you are around more than one person? How many of you would stand up to someone you need something from? How many of you have the courage to walk away from money when you have none and it feels like it’s your only hope?
Showing no desperation is like walking a tightrope.
I have been in that situation, where there is less than no money in the bank and trying to show confidence in the face of needing money to keep the business running. Luckily I now have a personal net I can use to offset this, which was created by past success, but in the beginning, it was not so.
There’s always that one guy in the room that drives the others when it comes to raising funds from angels. It’s the reason I do hate to have more than one or two people in a meeting I am pitching. Sometimes, you have no choice. Sometimes, there are many people. This situation has happened to me more times than I can count.
Let me set it up for you, just in case you deal with it in the future.
Picture this; big conference table. Eight people around it. I am at the head of the table so all can hear me. I always sit with my face to the window so people will not have to squint to see me due to glare. The “one” guy I identify before sitting that has already asked me the most questions; that is the guy I walk to the table with and guide him to sit as close to me as possible. Here’s why. In all meetings like this, there is one guy who wants to prove he is the smartest in the room. God help you if there are two, but there is always one when you have more than four or five people.
You can tell who he is almost immediately. Notice I say “he,” that’s because I have never come across a woman who feels the need to be the smartest in the room in this setting. Women, for the most part, are curious in these settings. Remember, we are talking about angels from whom we are seeking funds. Sometimes when I write about specific topics like this, a couple of readers think I am saying things about people in a general setting. Nope, just fundraising in the room with high net worth angels on this one.
So, now we are all seated, and Mr. Know It All (KIA) is next to me. Usually on my right so I can see him. As an entrepreneur in this setting, I hope by now you have developed an excellent ability to see things when you are not looking at them. I can see at least two hundred degrees in each direction, which means I can usually see what is partially behind me. I think my Wing Tsun training has had a lot to do with that, but it is a skill that has helped me many a time. It’s also important to look at people in the eye that may be directly in front of you, while “seeing” people who are partially behind you. This little talent comes in handy when you date also, but I digress.
As you start your pitch, you have to tell the group that you will be describing your business and why it is essential in the world. Make sure you show them that you welcome questions but will pause for them at intervals; otherwise you are going to get interrupted by Mr. KIA a lot.
I’m hopeful I do not have to tell you how to pitch as I am sure you have read up on that and learned it, but for starters, I always talk about my past. I talk about my experiences. I am still honest about barely finishing high school, never going to college, growing up relatively poor and also about my company’s. I talk about each of the five pervious ones I started and highlight two or three major points I learned from each. I make sure to talk about what was done wrong as much as what was done right, so people know I understand that I value their hard-earned money I am asking them to part with.
Once I cover my history a bit, I talk about what drove me to start my latest company. In terms of Billaway, it was always about helping people pay for the things they must by doing the things they do, without it costing them money. I explain how we do that and why it is a massive problem that up until us, was never solved. Here is where I pause. I want them to ask me about my past and about the problem I identified that I am trying to solve. This is also where Mr. KIA starts. He will start to ask some really interesting questions. He will have about four or five that will make me think about my business, but those nuggets will be mingled with about twenty of what can only be described as fairly insane.
The key here is to answer his questions, but as you do, look around the room. Do not stay fixed on answering him directly or you will create a one on one dialogue that he will take and run with. You need to control the room and at the same time not make him feel like he is being controlled. A person I used to know used the term “placate” to describe this dynamic. In a business setting, that is the perfect word, to appease someone. Unfortunately, she used it in a personal setting, which told me a lot about her.
Back to business. So after that little session, you get into the meat of the business. How you are solving this big problem that no one else could and how they can make lots of money by helping you. “Helping you” is so important. I always ask potential investors to help me build something no one else has. It has always worked for me, but I have seen founders use it when pitching me and it comes across weak, so be careful.
Again, too many articles and books have been written by people about fundraising, so I will not go into it deeply. If you want more info, hit me up directly via comments or subscribe to my mailing list to establish contact.
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As you go through your pitch, Mr. KIA will interrupt you. He cannot help himself. He heard his voice before and given it sounded so lovely, he has to listen to it again. Let him do it, but only let him do it a few times. Answer his questions without being defensive. This is the hardest thing to learn, but you have to.
Let me stop for a second and tell you that this is the thing I love most. People ask me, “What do you love to do?” and I often tell them that I love to create things no one else ever has, but in my daily life, getting asked hard questions is by far my favorite. I love being put against a wall and being under extreme pressure to perform. Somehow, time slows down as the pressure on me increases, which makes it seem like I have all the time in the world.
There is one more thing about dealing with a guy like this. Never let him get away with being wrong. It’s a bully mentality. If he’s wrong, point it out in a positive manner.
Let me explain; this guy, Mr. KIA, my new friend, who is sitting to my right, was listening to me as I was addressing a question from another participant sitting to my extreme left. I can see him out of the side of my eye make the dumbest looking incredulous face as I was saying something, so I stopped. I looked at him and calmly asked, “Do you disagree?” It stunned the shit out of him. He did disagree and asked me why I did not merely ask my clients for something that would show him and the others how much they are willing to spend with us if we expanded to new territories. Now, I knew this question was way out of left field because we deal with huge Billion dollar companies and while it is a brilliant solution, it would never happen. Also, if I had a letter like that, I would not need to raise funds. I could quickly get the funds from existing investors or a bank.
I told him flat out, “If I had a letter like that, which I would never get, by the way, I would not be in this room asking for your money.” Everyone in the room except Mr. KIA laughed. They knew I was right and he realized that he had asked for something that made him look much less smart than he was. It takes courage to do that to someone like that in that setting without destroying the rest of the room, but if you don’t, the rest of the room will think you are not a strong person much less a strong CEO. Stand up for yourself without being arrogant or aggressive. Stand for yourself without being defensive.
Raising money from individuals is hard enough so when a situation arises where you have a Mr. KIA in the room, you have to use it to your advantage. He will ask good questions, but make sure you know when his questions are not good and you answer them in the vein they need to be answered.
Last note about this. It is likely that the other investors will get back to you and let you know that they would like to talk to Mr. KIA before they make a final decision. Fight the urge to call him and talk again and if the other people give you feedback like “Mr. KIA said this is not a good thing or that is not a good thing”, address it, but not with Mr. KIA. He needs to be him and really does want you to call him to reinforce his role as the ONLY one who can get funds from the rest.
A good analogy is if you have ever been with a girl or you girls if you have ever been with a guy that has to be in control all the time. They need to be the one who’s world it is. They view you as happening to live in it. Investors need to be partners with you in the company, and anytime you have a partner dynamic where one partner needs to have power over the other, it never works.
Mr. KIA can be useful for at times, but much like a life partner, after a while, their need to be in control gets counterproductive and causes harm to you and what you are trying to create.
Out of the eight people in the room that day, seven invested. I asked Mr. KIA to be an advisor instead of investing the money he wanted to put in. I need to make sure that anything he could offer me as far as the knowledge I could use. I would take that knowledge, but I absolutely do not want him in my company as an investor. Much like I will never again be with someone who tries to control me in a personal relationship, there are too many really attractive investors out there to let someone like him into my company.
Embrace the assholes in pitch meetings, because you need them and they are not really assholes, they are just who they are. Use what they ask to educate the others about the market, the business and more importantly, how smart and strong you are, but make sure you keep them at arm’s length. If you are good, you will have Mr. KIA asking to invest. Don’t let him. Trust yourself and your ability to attract better people. You know you can, even if you have $100 in your account and are completely broke. I’ve been there. It’s hard but do it. Invest and believe in yourself. It will pay off.
Good luck around the table and thanks for reading.