Focus on the Learning, Not the Money

This week’s tip: focus on learning, not the money when speaking to investors.

An investor at their core wants to learn from, work with and see the world change for the better; that person that they are looking for is you, the founder.

One of the biggest mistakes I’ve seen founders make whilst forgetting this is focusing too much on the money you will get if you successfully fundraise.

By doing this you become transactional and lose that human-to-human connection which usually ends in you failing to fundraise for your start-up. 

The focus in your fundraise should then be on collaborative learning, not money.

And by focusing on learning (from both sides), this does 3 things:

• It creates a discussion rather than an interview
• It focuses on your opportunity rather than your risks
• It creates a better connection with the investor and yourself

Now, this isn’t easy to do; it won’t happen with every meeting you have.

But here are 4 ways you can create a learning environment in your investor meetings:

1: Control the room

Too many founders let investors control the room during investor meetings.

This instantly puts an investor into flight or fight mode trying to see whether they should spend more time with you. It allows the investor to probe you and ask about all the risks your start-up inevitably has.

You have to control the room from the start and set-up conversations, not pitches.

You do this by pushing questions back to the investors at the start. 

For example, you could ask, “How much do you know about what we do?” or “What are your biggest concerns?”).

This forces them to tell you where they might not know as much.

Then you can focus on ‘up-skilling’ them on how you and your business will solve this.

2: Build a connection with them, not your company

When you focus so much on the $$$ that could be hitting your bank, all you do is talk about your company.

But here's the thing; investors don't care about your company. They only care about if they trust you as a founder.

I see this happen a lot in the first investor meetings you have; within the first 3-5 minutes you go straight into their company pitch.

But, you see…

If you don’t focus on building a real connection with the person opposite you then the investor won't have the chance to find out who you are, what your personality is like nor what drives you.

The investor can never get comfortable talking with you as an equal if you are a stranger.

So how do you solve this?

In the first 5-10 minutes every fundraise of every meeting you have:

DON'T TALK ABOUT YOUR BUSINESS.

Make small talk, do the right prep so you can ask about mutual interests or connections. Just focus on finding out why that investor would be a good fit for you.

In fact, some of the most successful VC meetings I sat in as an investor, and watched back now as an advisor the founder never actually spoke about their company at all!

The investors still loved THEM, and this always ended in a follow-up meeting.

3: Show, don’t tell

Investors will never be as close to the industry as you are as a founder. They will never be speaking to customers day-to-day, nor understand the pain that their current problem causes.

Where you fail is that you assume investors know as much as you. With this assumption you start to tell them about your opportunity, but without real life examples.

This doesn't allow investors to be grounded an investor into your reality. And when they aren't grounded they start to question whether you can succeed.

That's why you have to show your customers, with real life examples and stories. Your goal is to make the investor empathetic to your customer which will make them start to discuss with you how it can be solved.

This is how you win.

Note: not all investors will get it. That’s okay. They were probably never going to invest into you anyway.

4: Treat the conversation as learning about them as much as they are about you

When you are so desperate for the money, you focus all your effort on the investor.

However, to have true power in an investor meeting you have to come across as someone who knows what they want, and needs to learn more about the investor.

You are the prize.

Your goal in the first few meetings should be to understand if they are the type of investor that you want on your cap table, as much as it is, the investor deciding if they want to invest into you.

This causes a more collaborative meeting as both sides want to show each other why they are a good bet.