Any bootstrapping entrepreneur knows fundraising can be a fickle beast sometimes. Whether you’re approaching friends or family, applying for a bank loan, or pitching to venture capitalists, financing your vision takes many forms. And it all comes down to one need: an injection of cash to bring your business to life.
How much? Well, because no two businesses are alike, that all depends. Some experts estimate the average startup costs about $30,000 to fund, while micro-businesses often get away with launching on a fraction of that. But for a lot of early-stage companies, we’re talking big bucks, as in hundreds, thousands, or even millions of dollars.
Imagine standing in front of someone who can make all your dreams come true with just one signature. A case of the stutters and clammy hands can strike quickly, so what’s the solution to keeping stress at bay?
Treat the pitch like a sales process rather than fundraising venture.
A Shift in Perspective
Usually, raising the dough your startup needs means pleading your case to a room full of potential investors. Just thinking about it is enough to give you the sweats.
But simply tweaking your approach — “selling an idea” rather than “asking for money” — completely changes the interaction for both sides. Now, you’re not looking for money; you are offering an opportunity.
That’s the kind of pitch seasoned investors will respect. Even less-savvy friends and relatives will feel reassured that they’re not just giving a handout.
In the end, this point-of-view shift smooths the fundraising process and bolsters your chances of scoring the cash you need for success.
You’ve acquired your target and determined your desired outcome. Now, it’s time to convince investors that yours is an idea worth investing in.
Here are three strategies that will help you make the shift from asking to selling:
1. Measure their muster.
In every sales job, determining a prospective target market’s potential is a must. The “spray and pray” method is a waste of sales effort, and it’s equally so in fundraising. Counteract this by doing research.
When vetting a potential investor, ask a few key questions: What is their investment thesis? Are they local? Do they already fund companies like mine? Do they focus on early-stage or late-stage companies? When approaching friends or family, figure out who will be open to a conversation about investing and who will be able to shell out the funds in the first place.
2. Put down a rapport.
In many sales situations, building a relationship with your prospect is crucial. Rarely, if ever, will you just walk up to someone and close them without having some sort of connection in place.
The same is true for fundraising. We always see companies copy a slew of investors on a single email that asks for money. I mean, have you ever called someone up after they sent you an unsolicited email asking for cash?
Whether you’re meeting an investor for the first time over coffee or going out to visit that rich uncle you haven’t seen in years, establish a bond that serves as a jumping-off point. Not only does it make it easier to ask for funding, but it also simplifies things for the post-funding period.
3. Ask for the sale.
This one might seem obvious, but it’s a core sales training tenet that a lot of people tend to forget. They establish rapport, get through the initial pitch, and then just sit there and wait for the customer to say, “Yes! Sign me up!” But forming a connection with your ideal investor is pointless if you can’t get the final pitch meeting in place.
If you feel you’re at a place where you’re ready to formally pitch, then go ahead and ask for the meeting; be aggressive, yet respectful. If you’re dealing with friends or family, don’t just show them your business plan and offer to come back in a week. Ask them whether they are interested in investing the amount you need.
Waffling on the ask or details like the precise amount needed elongates the process, which will turn off a potential investor. If you never get to the closing point, it starts to seem less like a sale and more like you’re just asking for money.
And remember that your goal isn’t to ask them for money — it’s to sell the fact that your business is a great opportunity. If you can’t make the sale to investors, how do you expect you’ll do with customers?
So forget about raising funds and shift your perspective to selling. It will take the stress out of the process and will help ensure you get the cash you need in order to grow.