Seducing Investors

A start-up business is like a hot kitchen. There are knives and hot oil flying all over the place, and the only people who should ‘go there’ are those who can stand the heat.

The first step in any pitch is seduction. You must create a picture of the market and the impact your business will have in it which is attractive and pulls the investor in. However, just as soon as potential investors seem hooked they often start to analyse reasons why the investment may fail, and here is where most mistakes are made.
Most entrepreneurs are good at seduction because it’s fun, but they fail to shift gears and give potential investors a real sense of their trouble-shooting and execution abilities in the outlining of their approach to taking their product or service to market.

They think they have won the investor over but then the investor often moves into analytical mode. They have the ability to move from empathy for the entrepreneur to business questions, such as ‘What are the risks?’ ‘How will they be managed?’ and ‘How big is the competition and market?’
The deal is always done at the beginning of any relationship, and it’s true with your investors as well. Whatever power-play is going on will persist and you can never fundamentally renegotiate a deal. Entrepreneurs can of course correct, but must make sure that the terms agreed on at the start is something they can live with.
Actually, what you want as an investor is an entrepreneur who is willing to live an abnormal life to succeed and has the ability to create the conditions of trust within their team and the mentality that they are all in it together. Remember when you are raising capital that financing is not the only goal – you also require a positive architecture for the firm where nothing will impede future financing or growth.

Financing should be completed to hit a milestone, not to survive for a period of time. There are five stages of company development: concept, product, validation, scale and sustainability or exit. Articulate how the money gets you to the next level, and most importantly, what you have done with no money already to get there.
Finally, put on your optimism every morning like a piece of clothing, so that you radiate success. People who achieve understand the mystery of success: there is no mystery – just passion, determination, and perseverance when everyone else quits.