Raising money for your business
Raising money is a job conducted by millions of people every year. A new bakery, a restaurant or coffee shop requires equipment and inventory, an automotive repair business, home goods retailer, home-based business or start-up software company all need initial and sometimes on-going outlay before hitting profitability. Depending on the nature, size and trajectory, a business may need only a few hundred bucks or few hundred million.
Individuals raising money are short on time and want bullet point lists, not a monologue of stories. Here are a few unorthodox ways to find dollars for your endeavor that have helped me raise over $300M over my career.
Board memberships and Associations
Board memberships are low-hanging fruit, because the organization is very proud to identify the board members. In a well-intentioned effort to be “transparent,” emails are often listed for each board member. There you have it. So the attempt to get to the high-net worth individual can be found in about five-ten minutes of searching board positions.
Associations are even better because usually, those individuals also have cell or direct phone numbers listed. Like board members, these folks usually have full-time jobs/businesses that are completely unrelated to the association, but going that route gives you what you need to have the first conversation.
This is a goldmine for contact information while allowing you to channel your inner CSI. It all starts with searching on the name of the target or his/her company, board member or other affiliation with the key word “legal.” Including that one word can open a plethora of contact info, particularly email. Why? Because so much legal activity is placed on the Internet for all to see, sometimes by the courts, other time by people interested in making the goings-on public. Let me attest that I’ve found the CEOs of the largest firms, most reclusive wealth management people, public figures and people in between through published documentation which includes emails. A rule of thumb: the higher profile and greater the wealth, the higher the likelihood that person is going to be involved in, or the target of litigation.
A rule of thumb: the higher profile and greater the wealth, the higher the likelihood that person is going to be involved in, or the target of litigation
Now, you’d think that these emails would be long-since changed. Rarely. It’s because the person(s) named or even tangentially a part of the activities aren’t aware their personal information is being used, let alone published, or perhaps they mistakenly believe the documents won’t be released, and if they are, the attorneys will scrub the contact information. (What attorney is paid to scrub info before it’s released? They are paid to win the case, not monitor what the courts publish).
No, this is not for one to inquire about the family of the deceased. Quite the opposite. Depending on the individual, other peers, or business associates are often quoted.
This last year, I happened to come across an article on a prominent businessman who amassed millions over his lifetime. Quoted in the tribute was another man who I’d never heard of before. I googled him (who doesn’t?) and learned he owns one of the largest big equipment machinery business in the world. After I delved into his background (thanks again google), watched a video or two and read more articles, it was clear he’d be an interesting funding candidate.
School and other business associations
Once again, you have multiple entities who are proud to identify sponsors, donors, partners and successful alumni. Any or all can be sources of contact information. In some cases, you can leave messages with a pitch and the request to contact will be passed along. It’s a good (and bad) trait that non-profits and schools have this thing about being nice and forwarding messages, which may come across to the non-business person as strange. It’s not. You (the person leaving the message) could be a donor or a sponsor as well. It’s not the receptionists job to know or determine your motivation, but to be helpful.
Combination of tactics
In the case of the big equipment owner, he was one of four men quoted in the article. One by one, I looked them up, determined who fit my desired profile for funding and narrowed it down to one. I immediately delved into his board memberships. From there, I discovered not just his personal email, but his cell phone! I held onto it for a few days, then at precisely 11 am on a Thursday, I felt a strong impression to call. Sure enough, he was home, convalescing from surgery, lying on a couch and answering the phone. We ended up speaking for nearly an hour, during which time we learned of our commonalities (family with addiction issues) our commitment to the community (he as a big supporter of the Boys and Girls Club, us with abused women/children)…pretty much anything but business. It was the start of a great connection, and it was all due to reading an article, tracking down the board membership/contact info and calling.
Don’t forget the Hedgehog
No. Not the animal. The strategic model used worldwide to identify the alignment between organizations, but is commonly applied to a variety of pursuits. It was first introduced by the great Jim Collins, and is a key to creating a value proposition between the entities seeking and giving money.
In short, it comes down to passion, economic engine (fit) and skill. Whether you are on the small end of the dollars or the very largest, an investor is going to place money based upon these criteria. One can have the money and fit, but no passion for what you are going to bring to market. The deeper and stronger the alignment across these three areas, the more money you are likely to get.
What doesn’t work
Instagram, Facebook and other forms of social media are rabbit holes that rarely get you to the decision maker or target contact. If the person is a public figure (think athlete, singer, comedian, news figure), a social media coordinator with little or no authority is managing the account. It’s rare that a person in this role will forward your outreach.
I’ll give a recent example: as an experiment, I contacted a mixture of those categories mentioned above, 112 to be precise, using a customized message for each. Approximately 9% blocked direct messaging. Of the remainder, I received 4 ‘likes’–meaning whoever was on the other end, coordinator or primary contact, liked what I had to pitch (we’ll just take it at face value) but wasn’t going to respond. Of the remaining, two people responded. The IG accounts were athletes for the NFL and MLB, one current and the other retired, both MVPs and very well known.
Further correspondence revealed the NFL athlete wasn’t handling his own Instagram, but a coordinator who had to come clean with me when it was time to sign a non-disclosure agreement. The former major league baseball player, (quite famous for his role in the world series) was–and is–to this day, the only person I’ve come across who manages his own Instagram. He kindly forwarded me to his business manager.
The final statistics? 112 outreaches, one meaningful contact. That’s a terrible ratio when considering looking up an article and reaching a multi-millionaire in a single phone call. The epilogue: The manager for the MLB player revealed a big chunk of his money ($8M) was going towards his new business in he food and beverage industry.
Going back to the hedgehog model, he had the skill and the passion, but not the economic fit to participate. As the entrepreneur or person responsible for bringing in the money, you want to get to this point of understanding as quickly and cost effectively as possible.
It only takes one
Success in this world (raising money, strategic partnerships, biz dev) is part strategy (the fit/the why), tactics (how you are making the contact) the pitch and then building the relationship. My brilliant husband pointed out that it’s also personality and fearlessness. True–but let’s take this one step at a time. The personality of the entrepreneur, or those on the front line is a combination of belief, determination (fortitude and never-say-die) attitude. If you already have these traits, go forth and conquer. If not, build them bit by bit, and with each call and outreach, you’ll get better. Above all, remember this: the mantra that trumps all: it only takes one. One positive response to keep your enthusiasm level high. One yes for the initial money. One person to be a passionate believer and introduce you to others. In the end, if you have a good idea or product, and the market needs what you are offering, keep going until you have the one.