How Investor's Really See You - And It's Not What You Think
Sometimes the deck is just plain stacked against you. It's that famous uphill climb that we've all had to make some time or other. In business, this can arise at times out of inequality in a bargaining position. And nowhere is that more evident than in the funding game, because the one with the money holds all the cards. After all, he or she knows you need their money. They know your need may be critical. They know you might not have time on your side. And they know something else . . .
You'll say or do just about anything to convince an investor that you and your company are a winner.
Armed with your carefully crafted pitch, your artfully designed Power Point, and your meticulously developed business plan, you probably see yourself as competent, trustworthy and creative -- a true innovator with a product or service that will make a positive difference in the world and return a handsome profit. You're right to think that way. If you didn't, you wouldn't be worthy of your title as CEO or Founder. You feel like you have superpowers!
But here's the problem . . .
You walk in the room as a confident and intrepid innovator, but what the investor sees is a con man out to separate her from her hard earned money. You open your mouth and start to very cogently explain what's truly special about your 
company, but the investor hears the staccato voice of a circus barker saying "step right up ladies and gentlemen, see the giant ape, wonder of the world, just fifty cents for the amazement of a lifetime! Step right up, just fifty cents, but be careful, he just might bust right out of his cage and eat you!"
It's pretty hard to overcome that Grand Canyon of a gap in perception.
But there is a way and I'll tell you what it is shortly.
But a short time later it hit me: this guy is who I was when I was pitching my own business to investors.
That was an eye-opener and it set me on a path to understanding not just the breadth and depth of this perception chasm between innovators and investors, but also how to build a bridge to cross it. If you've been reading this blog for a while you'll recall that I wrote an entire series of articles about trust. That should give you a clue as to the substance this all-important bridge is built with.
Trust is the only way to bridge the gap.
I can hear you thinking "Rob, I agree trust is important and that comes from competence. I'm a competent, confident, highly successful person. My resume is full of examples of that."
With all due respect -- and I mean that because I'm on YOUR side here -- to an investor your resume is "suspect" -- a well-crafted bit of subterfuge to distract he or she from the gigantic risk you pose to them. Same goes for your pitch, your Power Point, your business plan and those spreadsheets you worked so hard to perfect. All suspects in a lineup.
Just take the case that "trustworthy" doesn't equate to "trusted." To be trusted takes a whole different set of things. That's why I wrote extensively on how to develop real trust with investors. If you haven't read the series yet, please do. Frankly, it's indispensable. The first article in the series can be read here.
The key points to developing trust are:
- Trust is developed in relationship, not in a resume
- Trust is linked to coachability in the eyes of investors
- Trust can be strengthened by being vulnerable
- Trust is weakened by trying to appear invulnerable
- Trust is bolstered by showing you are count-on-able
- Trust is enhanced through genuine listening
Until you actively build trust with investors, they simply won't perceive you as trustworthy just because you have past success or appear competent. Like I
said, the deck is stacked against you here and bluffing won't do any good when the investor is sitting on a Royal Flush.
A great illustration of this perception gap is found in that old movie "The Music Man." Harold Hill, played by Robert Preston, is an entrepreneurial con-man.
He's an innovator; an idea guy. And his idea is to sell musical instruments in a small town by convincing the town that it needs a marching band. He's a master pitch man and he quickly gets the whole town behind him, by promising to teach everyone how to play their instruments and leading the band. He has a vision for the town that fills the people with civic pride.
All except one person.
Marian, the town librarian, played by Shirley Jones, sees right through Harold's pitch. Cautious and prim by nature, she is literally revolted by his schtick and tries to convince the townsfolk that he is going to let them all down. Of course Harold falls for Marian and does everything he can think of to engender trust in her. But nothing works. Like those investors you'll be dealing with, Marian is immune to Harold's charms.
Now here is where the story has real value for us today . . .
Really get this nuance and it will truly help you win the game with investors.
Just stay with me. Allow for the possibility that until you're a proven success you're a bit of a con when pitching to investors. You've got to actively do things to build the bridge of trust -- and I've detailed those things in the series on trust in this blog.
That's what Harold finally figured out. In case you want to watch the movie I won't tell you what Harold did to become trusted by Marian, but what I will tell you is the greatest lesson I can share with you about trust. You see, when Harold started actively doing the things that built real trust with Marian, he actually became the man he always wanted to be and he found a way to keep his promises and everybody won.
Harold pursued the actions that develop trust. It changed him into a truly trusted person. He got the girl. Everybody won. His other option was to run the scam, get the money and leave town as fast as he could.
Now THAT is what investors fear you'll do after they give you their money, their time and their reputation. There's only one way I know to temper that very real fear: cultivate the qualities that create real, authentic trust between you and your investor. In the process, you'll be transformed into the man or woman you always wanted to be -- both in their eyes and in your own. You'll be able to stop "trying" to be trustworthy and you'll "be" trusted.
And THAT is the only bridge I know that gets you across the huge chasm between innovators and the investors you court to help build your visions and dreams into market success and fulfillment.
Key Takeaway: You may think you're a trustworthy person and that your track record and hard work merits trust. But you're a con-man or woman to investors until you prove otherwise. It's not a quick fix, but it's a rewarding journey because as you cultivate the qualities that engender deep authentic trust with your investor, you'll become the man or woman you always wanted to be in the process. And in the end, you're much more likely to get the check, see your company succeed and find fulfillment.