You are a company who needs to raise money. Holy s*#%! You definitely need Research & Development. Investors want to know that they are not going to lose money (they may not gain). But what I think is, the most important thing in any ‘transaction’ is, the human element. Investors want to know “You”. They want to be involved but the process gets even better when you build relationships with people behind the money and that takes time. So start now.
Will investors who do not know you give you money? Yeah! Some will. If you have a rock-solid presentation and product that is ironclad you will more than likely peak people’s interest. Most people though want to know who you are before they invest their time further. Fundraising Relationships are similar to any other relationship – you develop good relationships over time. When you do this, you build trust and respect and the relationship grows. There are steps to building relationships. It usually does not start with someone just giving you $1 million.
The coffee shop phase. In all relationships we start by building a foundation. This is where everyone gets to know each other. In business, building the foundation not only includes getting to know investors as business people but as people and allowing them the time to do the same.
I equate this to meeting someone in a coffee shop. You are waiting in line for your coffee. You say Hi, how are you to someone else waiting in line. This is the basis and start of the initial relationship. Since you are at the same coffee shop you already have something in common. The other person might ask you what you do or something else about you. In some situations, that’s where it ends.
In other situations you find some other commonalities and the relationship starts to take off. You might suggest having another conversation over coffee. You might exchange phone numbers.
The “Let’s grab lunch”, phase. Would you grab lunch with someone you do not know? Maybe but probably not. It would probably be quite awkward. What would you talk about?
However, if you have gone through the coffee shop phase at this point you have probably exchanged several texts and emails. Enough so, to realize that you want to continue to develop the relationship.
The next phase is getting to know the person a little bit more. Digging a bit deeper into who they are. It is in this phase that both of you are still exploring, but are committed to spend more time together. There is something there. Trust is beginning to develop, and you have some commonalities.
“Dinner and drinks with significant other’s” phase. You have had one or several lunches. Texts, emails and phone calls have continued to increase. At this point, you have probably worked on or done something together. It may be that you have helped each other with something at work.
You may have played a round of golf. Clearly, you are jiving and want the relationship to continue. You may even do almost anything for the other person (like give them $1 million). You have similar values. You have developed trust and respect (enough to know that they are not going to run off with your money).
Given all of that, you have decided to invite your significant others along for dinner and drinks. I do not know about you but I am not inviting my wife for dinner and drinks with just anyone or someone I just met. We have to vet them first. Not only do I want to know this other person but this also gives me ample opportunity to know who they are in their other relationships.
This might seem like a long process and it is, but that is why you should start now. I think another way to look at this is, would you give someone you just met, $1 million dollars for a great presentation and is it seemingly a great idea?
What would need to happen to create an environment where you’d feel comfortable giving someone this amount of money? Again, you probably can get $1 million dollars from someone you do not have this level of trust and respect with, but I bet it will be harder and there will be fewer.
When I first started my private practice I did a TON of networking. I was trying to secure funds in the traditional sense but I was trying to gain clients which in my business turns into money.
I tried working through the steps above but networking is hard because you may never see the same person more than a couple of times but I can tell you, they sure were not giving me clients based on my ‘presentation’ or knowledge.
As a matter of fact, some of us would poke fun at those people, who just went around the room sharing their business cards with everyone around.
So let me be honest, you do not need to get to dinner and drinks with significant others in order to gain people’s trust and Respect or their willingness to give you money or meet clients.
Some relationships stall out at the first level and that is where they stay but keeping up on those relationships will still give you credibility, trust and respect.
Not all of our relationships have to be all in but, there are certain elements that are important – you caring about me and me caring about you!