Evoking Investor Trust - Are You Fundable #7
In my last post in this series, I took you through some specific processes you can use to reveal your flaws in a way that actually builds investor trust and makes you a hero for being open, honest and coachable. We discussed that this is very important because you’ll typically only get one chance with an investor and he or she will likely ask you questions designed to either evoke trust or fear in his or her mind – depending on how you answer.
Remember this as you practice the right way to discuss your warts:
What you don’t reveal and what you do reveal
are both a revelation to investors
In other words, what you don’t reveal actually reveals a lot about you that can destroy trust. What you do reveal, even if it shows your flaws, can build trust. And the way you reveal things matters, too. So let me quickly remind you of the three-step process for revealing your flaws:
- Reveal the flaw unemotionally, as a matter-of-fact;
- Describe how you compensate for that flaw;
- Hold the context that because of your ability to compensate for your flaws, you may be the best candidate they can imagine.
We also identified the place in your conversations with investors that often brings you to the moment of truth – where you can either build or destroy trust. Recall that it is the moment when they ask you the question that you can’t immediately answer.
Remember what to do in that situation?
Just in case it hasn’t yet set in I’ll remind you of the three powerful words to use in that situation . . .
I don’t know.
I want to build on this for a moment. Because obviously just saying “I don’t know” isn’t a complete answer to a question about your business, your team, your products or your market. Think of “I don’t know” as the starting point. That answer can open the door to building investor trust, but a specific kind of follow-up to “I don’t know” can often swing the door wide open.
The way to get that door wide open is to follow up “I don’t know” with something like “but I can get you that information,” or “but I have been thinking about this myself and have a plan,” or . . .and this one is by far the most powerful way to build trust:
“but I’d love to hear your thoughts on how we could develop a way to answer that question.”
You get the idea. You are communicating three important things here:
- That you recognize the investor’s question was valid and important;
- That you realize it does need to be answered at some point; and
- That you are interested in the question and in the investor’s perspective and help
That’s the beginning of real trust.
So, let’s re-word our mantra from last week by adding one simple, but really important word:
I don’t know, but ____________
To demonstrate the principle, I’d like to provide you with a brief dialogue. This dialogue isn’t an exact replica of a specific conversation I’ve been, either as an entrepreneur or as an investor. But it represents an amalgam of years of these kinds of conversations and it’s designed to help you evoke trust when the unanswerable question arises.
Here is the context:
Our intrepid entrepreneur, John, has gotten the key meeting with an investor, Mary, that really is interested in his or her company. As they sit and begin to talk, the investor poses the unanswerable question.
Let’s pick up the story there . . .
“Tell me, John, how do you know that your price points will meet the market in a way that can trump the competition? Don’t base your answer on ‘features and benefits’ because we both know that is only a part of the equation.”
“Mary, that’s a great question and one I’ve been thinking about for a while now, but I don’t have a perfect answer for you. I don’t have specific data to prove that our pricing is where it needs to be right now.”
“So you’re saying you don’t know yet or you can’t know until your product is in the market?”
“I’m sure there is a way to get some real data on this Mary, but honestly I’m not sure how to do that. I guess it’s more of a hunch that there must be a way. What do you suggest we do?”
“I’m glad you asked, John, because there is a way. I know a process that generally provides some actionable data, but you’ve got to commit to the process itself for some time or it won’t work.”
[Mary pauses . . . lets the idea sink into John’s mind . . . she is interested whether he is open to hearing this, even though she has said it’s not necessarily a quick and easy fix because if he is, that will reveal something to her about his commitment and character]
John looks at Mary, chooses his words carefully and says, “If you know of a process that could get us truly actionable data I’d love to learn about it, but . . . what I’d really like would be if you’d help my team learn it and implement it.”
“I tell you what,” Mary concludes, “I’d be willing to coach your team to learn how to implement the process and then let you have a try. We can follow up in thirty days and see what you’ve learned. Sound good?”
“That sounds fantastic Mary, when can we start?”
John just hit a grand slam with Mary, because not only has he treated her question seriously, but he’s asked for her input and her direct help in implementing her suggestions. By accepting, she is already agreeing to get involved with John’s company – she hasn’t yet committed money, but she’s committing time, expertise and skills that will help answer her own question – one she has personally identified as critical to success. And, should she get data she likes, she may have colleagues that would invest with her because she’s gotten involved herself.
So do I have your trust that the way to build trust is to reveal your flaws and admit when you don’t know the answer to something an investor asks, to value the question and to engage with the investor by asking for their help?
I hope so because it is this type of real, open engagement that builds a bridge between you and the investor. It is a part of establishing relatability, human being to human being. You can enhance this with little things like making good eye contact, using the investor’s name frequently, asking them to expand upon their comments, learning about their background, interests and wins and losses and using humor to be self-deprecating.
Let me say a few words on self-deprecating humor. It breaks down barriers like nothing else. The reason is that when you “call one on yourself” you let people know that you don’t take yourself too seriously and that makes you more human, more like everyone else. Now, I don’t mean that you need to put yourself down and deny your own accomplishments and talents. That’s not the point. That doesn’t build trust. What I’m talking about is acknowledging your human-ness, your imperfection, using humor to call one on yourself when the time arises. It makes you approachable and relatable and that helps build the relationship.
Each of these things opens doors to a relationship and the foundation of trust you need to get the door open is the very same foundation you build upon using the methods we have been discussing to walk right through and get the funding you need.
Saying “I don’t know” to an investor’s unanswerable question is the beginning of building the bridge to trust. Adding a “but” to your answer can complete the bridge that spans the gap of fear versus trust in your investor’s mind. A truly powerful way to use the “I don’t know, but . . .” answer is to engage the investor’s own knowledge, skill, and experience by inviting him or her to help you find that answer. If they agree, you’ve won a great victory, because they’ve agreed to give you some of their valuable time and input and from there it is a much shorter journey to their checkbook.
P.S. Have you downloaded our complimentary Are You Fundable stage one kit? If not, you can read about it and download it here. Not only is the kit invaluable but it comes with a session with an Intelliversty advisor after you complete the kit.
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