How Do You Go About Finding Outside Investors and What Does It Take?
Networking is always the best method to build your universe of contacts. Historically this was done by attending investor pitches, meeting other CEOs and Founders and working with consultants to target specific categories and profiles of investor. However, with COVID and more technology and social networks there is an increase in cold outreach through platforms like LinkedIn, Angel.co, angel syndicates and other platforms that allow you to publish your profile. Of course, crowdfunding is also a way to find angels, as these platforms have member that are active and want to invest small amounts in many deals. This however a very different strategy with a different marketing and sales plan than approaching traditional angels and VCs.
One key strategy is to back trace investors who made money in the sector before from SEC filings on IPOs. This can point you to individual investors as well as venture capitalists and even corporate investors.
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Another technique I find highly effective, but requiring a lot of calendar time to develop, is to reach out to CEOs of companies investors invested in and approach them for advice and eventually a warm introduction. Most CEOs will be open to talking to and meeting other CEOs for lunch or dinner. There is an old saying to say “Ask for advice when you are seeking money” as a direct approach will be less effective. And along the way, you can build a board of advisers that will learn a lot about your company and eventually open up their Rolodex of contact to you as trust is built and your company makes progress that they will see as validation of your ability to execute and deliver on your promises. As 75% of new entrepreneurs will not do this. As they are unrealistic and lack the skills to develop value.
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I can not count the number of younger entrepreneurs that have wildly ridiculous expectations about raising capital. One even asked me if I could “Help me become a billionaire within the next year or so?” This is so delusional as to disqualify them as someone that can be successful, since this has not happened in the history of the world. However, people think it has because they have not researched the 5+ years of learning and failure everyone, yes everyone, had preparing to be a successful entrepreneur. You name it and look into the history, you will find a long period of learning, failure and development of the idea. Elon Musk, Bill Gates, Richard Branson, Michael Dell and virtually everyone else you can name that was presented as an “overnight success” by the press had years of development to get there. Not realizing this sets unreasonable expectations and makes you unteachable and unable to attract any investor that knows this is idealism. It is a huge red flag that say “Do not invest n me”.
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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
Call (619) SCALE06 or email [email protected] for a complementary strategic consultation.
