VCs love to play the game, and being outside of their comfort zones – so help them!
If you find yourself in the lucky position that several investors are fighting between themselves for your favour, or rather for a chance to back your company, that either means you have a product with a lot of potential, or you are a skilful negotiator.
Now obviously, we don’t advocate trying to raise money for startups or products that don’t bring added value to the world, so if that’s your thing, stop reading now!
Now, let’s say you do have a great idea that you believe in wholeheartedly but you’ve been struggling to get people excited about it…especially investors.
Well, first of all, you have to engage with investors – if you fear them, they will fear you – not in the same way, but in a kind of “ugh, not another weak-at-the-knees startup guy”, kind of way.
If you need time to build up your confidence, start sending out regular updates about your business and your products. If an investor responds and asks for more detail – don’t always humour them – but keep sending the updates. This way, they will see you are not desperate.
You see, when you give somebody something consistently over a period of time, when you take it away, they will miss it.
Let’s say a group of 25 investors you have targeted have been receiving updates every fortnight for 6 months – and suddenly there’s radio silence – woah, the investor thinks, did they get funded? Dammit, I knew I should have made a move! Next time, for sure, I’ll dive right in!
But after a hiatus, lets’ say you start sending again. Now this time they are going to do what they promised themselves they would do, and get involved!
Or, you take an expression of interest, and use it to fan the flames of more serious interest.
“Dear Mr Investor, it was great to meet with you last week – I am excited to tell you that since we met we have received 3 further expressions of interest from investors, and are happy to tell you that we proceeding with our seed round, for a higher funding figure and at a slightly higher valuation than I quoted to you last week.”
If there’s one thing an investor hates more than anything else – its missing out. They will do almost anything not to miss out. So, that is a card you can play – provided you put the work in, you will find investors that will express interest, perhaps a smaller VC or angel, who actively wants to work with a larger one, which means that they will play along with you.
Ok, final suggestion (for today).
A party – who can resist a party – set aside some budget and make sure there’s food and drink! Or, do not provide a single refreshment – not even a twiglet. This reverse psychology suggests you don’t need to impress anyone, it is they who must impress you.
But how do you make sure they attend? Venue is key – it must be somewhere that is either highly convenient (a pop-up in Covent Garden?) highly thought of (the IoD, a University), or highly exclusive (The Groucho Club, The Boundary Hotel?, an HHH Speed Pitching Event?), or highly imaginative (a cable car – a dance studio – a One Rebel Gym?)
Investors are often looking for new experiences, and like to be taken out of their comfort zones – if they didn’t they would not work in such a risky profession!
Investors are people like you, people with ideas, who get excited about stuff and love trying new things. Provide these kind of experiences, and reap the rewards.
When it comes to pitching your funding round, a little psychology, and a sense of adventure, and of humour, goes a really long way.