Entrepreneur'$ Boot Camp Interview 11 - Tested Funding Tip #2
Every once in a while I meet an entrepreneur who doesn't mince words; doesn't tell me what he or she thinks I want to hear, and doesn't try to get me to drink his Kool-Aid. I appreciate those meetings because I can't help people succeed unless I know the down-and-dirty reality they're living in. So when I spoke with Eric Linxwiler of Trade Beyond Network (TBN) recently, I got a refreshing dose of the reality in which many senior executives in emerging companies seeking funding find themselves.
I want to share that reality with you here because I think sometimes we can all ignore the white elephant in the room. And yet it simply can't be ignored if you want to succeed . . .
Getting your company funded is hard work. It is mentally taxing. It requires a thick skin. It almost never comes easy.
So there it is. The straight dope. Getting funded is hard and it's not a game for the faint of heart or the partially committed to play.
But that doesn't mean it can't be rewarding and even fun. It can be tremendously rewarding and immensely fun IF you have a sober understanding of what you're getting into. And that's where an experienced and honest mentor can save you a lot of grief.
Eric's company had been around for 20-plus years and is a leading player in the supply chain management niche of the retail industry. They've been a true industry leader, with multiple large-scale accounts with retailers. Things were going along just fine. And then they had a realization: their system was enabling hundreds of suppliers to gain business from retail customers that had paid to be in the system they had created. But the company (TBN) wasn't monetizing the use of the system by those suppliers. So they conceived of a value-added network that could benefit those suppliers in a direct way and generate additional income.
They immediately faced a choice: do we self-fund the development necessary to build, market and operate the new supplier network, or should we raise capital so as to do it all far more quickly?
They opted to seek capital and, after a "false start" with another consulting business, found their way to George Kenney, myself and the Entrepreneur$ Boot Camp. Eric found himself in the unique position of spearheading the initiative, but not being the CEO of the company that would have to pitch investors. So, the Boot Camp would involve George and I training a foreign national from Hong Kong to understand the realities of funding a company here in the U.S. Eric participated in the Boot Camp along with his CEO and shared four important "reality checks" with me that I want to pass on to you.
1. Pitching to Investors Has Nothing To Do With How You Pitch Customers
Eric recalled that his CEO initially pitched a long diatribe about the features, benefits, and utility of their product. Most entrepreneurs make the mistake that investors care about the product or service as much as they do. After all, entrepreneurs live with their offer 24/7 and work tirelessly to improve it, perfect it and make it attractive to customers. Unfortunately, investors aren't customers. They are interested in two things according to what Eric learned from Boot Camp:
- Investors are most concerned with whether your team has the moxie to win your game;
- Because they're mostly concerned with how they can make money from your efforts
That's it. It's really that simple. But that doesn't mean it's easy. Because . . .
2. Your Emotional Attachment to Product & Company Is a Detriment to Funding
Entrepreneurs make the process more difficult when they're not coachable. When they can't get past their, as Eric called it, "emotional smokescreen" about their offer. Part of the magic that happens in the Boot Camp, when entrepreneurs are coachable, is a tearing down of the protective shield many entrepreneurs rely upon to stay in their own virtual reality about the value of themselves, their teams and their products and services.
Sounds a bit harsh eh?
That's not the intention. Quite the opposite actually. We all get attached to a virtual reality about the things and people we love. Just ask an addict. If you're a parent, think about a time when your kid came home with a note from the principal or you received a call from a neighbor that he or she was beating up another kid. Your first reflex is denial because you've invested your time, your energy, your spirit and your love, commitment, money, reputation, and future in that person. It's no different in business. You've invested all those things in your company. So, it's natural to want to share everything about all that to investors, as if they'll be as -- pardon the pun -- invested in it as you are.
But they won't be.
It's a zero-sum game for them. Win or lose. You or some other team. So, you've got to be willing to see you and your team and your offer from that perspective and then speak powerfully into that perspective. That's what you learn to do at Boot Camp. And it's vitally important because . . .
3. If They're Not Interested in 30 Seconds They'll Never Be Interested
You have about 30 seconds to get their interest. That's it. And if you're spending that 30 seconds telling investors all about your amazing product or service and not about why you're a good risk and why they should want to hear more, then you're wasting your time.
There is a secret to that first 30 seconds and you either know it or you don't. I can give it to you here and now -- I just did in fact (go reread #1 above)-- but knowing the secret is only half the game. You've got to be able to apply the secret, in the moment, often when you're under pressure, fatigued mentally and have the worries of running your company on your mind as well as getting more funding. That's not easy and as Eric related to me, a big part of the value of Boot Camp is going through that stressful process again and again until you can master your environment and be strong, cool, calm and confident (even if you don't feel that way inside). It's important to master the first 30 seconds of your pitch because . . .
4. Funding is a Numbers Game: Your Initial Goal is to Get Invited Back
There is a falsehood out there in the world that can grab hold of your mind and sentence you to failure. It is the notion that your product, service, team, and strategy is so awesomely great that if you can just get in front of 2 or 3 investors one of them will be salivating to get your deal.
It's just not true.
We get that from Hollywood. We get that from social media. We get that from pop culture. It's just not true for 99.999% of companies. The truth is that funding is a numbers game and your goal whenever you are lucky enough to get a meeting with a bona fide investor is to leave them wanting more -- a strategic method for which is at the heart of the Boot Camp experience. Get the follow-up meeting and at the same time keep filling your funnel with additional investor leads. Pitch and pitch and pitch again. It may take 100 meetings to find the right investor, at the right time, with the right offer and that you actually want to take on as a key member of your team going forward.
Tested Funding Tip #2
For most of you, funding your company will not be easy or fast. It's a competitive, somewhat ruthless game of survival. It's wise to prepare for it that way. Boot Camp like funding is "difficult and demanding and it's designed to toughen you up to play and win the long game of funding." It's true that you could be lucky and get funding fairly easily. That's happened more than a few times in history. But the odds are distinctly against you. So, if you're wise, you'll prepare for the long game and arm yourself with the tactics, strategies and mental toughness it takes to win the long game.
After all, you've got everything at stake.
To see if you're qualified for Boot Camp to fund your dream, call me. Pick a time slot on my calendar at www.IntelliversityCampus.org/Connect and then let's talk.