Tag Archives: Startups

Raising Money 101: It’s a Selling Moment

The recent Broadway revival of Arthur Miller’s Death of a Salesman got me thinking about the differences between the pitches I hear from entrepreneurs, and why some succeed and others don’t.

Willy Loman’s character did much to lower our society’s already low opinion of sales and selling, but the fact remains that the concept, if not the actual act, of selling is a vital process in our economic system. For example, if you’re an entrepreneur looking for financing, you are selling an idea to a buyer – usually a venture capitalist like me.

Overcoming the Attention Deficit Problem

Everyone with a smart phone is suffering from an attention deficit problem, including VCs. Your future prospects and customers are inundated with too much information and too many choices. Translation: Get to the point. Now. In fact, I should have started this article by telling you that!

It sounds simple… yet rare is the pitch I sit through that includes a concise summary of the mission and values of the company and a one sentence explanation of what the company does. This is problematic, because part of what we look for when investing in a company are people who can chop complexity out of the business and clearly articulate what they do and why it’s important. Often when I ask for clarity on these points, I don’t get clear and simple answers.

The real problem with an inability to nail “the what” is that it suggests that you have not thought through your business sufficiently to explain it in a concise manner. It was the 15th century mathematician Blaise Pascal who wrote, “I am sorry to have wearied you with so long a letter but I did not have time to write you a short one.”

I’m sure you get the point. An elevator pitch is not important because you can deliver it to a guy in an elevator, it’s important because it demonstrates you’ve thought through your business sufficiently to know why it matters.

What really gets my attention is a concise description of why the thing you are most passionate about matters to the rest of us. If I’m listening to four new business ideas each day, they can’t all be good enough to make me sit up and take interest. Make sure yours is the one that breaks through the noise. Otherwise, all of the distractions I have in my life will creep back into my brain and crowd out the message you are trying to convey.

So start with your lead, not your market slide. And if you can’t tell me clearly your company’s value-add, the problem it solves and why your idea is different in under a minute, you shouldn’t be pitching it yet.

Overcoming “No”

The fundraising process is tough, and it’s made tougher by the fact that venture capitalists say “no” most (read: almost all) of the time. Statistically, we fund less than one-half of one percent of the ideas that come through the door. Those are pretty daunting odds. But they’re not unlike the odds of success you’ll face once you’re in business.

The difference between the entrepreneurs who overcome those odds and those who don’t are those who won’t take no for an answer. And that’s a quality we screen from the very first meeting.

Presenting your idea is not enough. You have to sell your idea and passionately convince an investor that you’re worthy of the risk you’re asking them to take—as well as the time and money they will invest in your company.

You also have to convince your investors that you have the courage of your convictions. We want to know if you’re the kind of leader who will break through barriers and keep going despite countless setbacks. You’re going to face a lot of rejection and you need to be fearless.

Now even though I’ve just said you have to break through barriers, the catch is that I don’t want you to be hard-headed.

We want people who are convinced they have an answer, but not operating with the belief that they have all the answers. There’s a difference. Good sales people are good listeners, naturally inquisitive and they actively ask their buyers for feedback. After your next pitch, try asking the firm’s partners what they think.

Surprisingly, very few ask that question, but it is a question that signifies the entrepreneur who is flexible, self-aware, and would probably make a good partner. Don’t be afraid – you might be surprised with what you hear and you’ll probably glean some useful insights that will make your next presentation even stronger.

Finally, ask about next steps and send a follow-up note. I’m always shocked with the lack of follow up from entrepreneurs who have come in and pitched me, but leave it in my court to follow up.

The start-up world lives and dies based on the cash it raises. During its lifetime, the average start-up will likely require several rounds of funding, so being good at raising money is critical. Being a good salesman is also important because the act of selling doesn’t just happen when you’re asking for money – it happens when you’re building a team, when you’re selling your first product, when you’re looking for partners, and when you’re trying to inspire your employees. So be concise.

Show passion. Be fearless in your follow up. And finally, be brave enough to ask for feedback. All of these things will make you more credible, and most importantly, more likeable. Because you don’t want to end up like Willy Loman.

[This article was originally published by CHARLES MOLDOW at Techcrunch.com, 03 Jun 2012]

10 Things Colleges Don’t Tell Young Entrepreneurs at Graduation

Starting a business just out of school? Take notes, as there are a few things you should know about entrepreneurship that college simply won’t prepare you for. Here are 10 things your university won’t teach you:

1. “Hope you liked living like a college student.”
Now that you’re out of school, you’re ready to get your own place, maybe buy a car and stop eating Ramen noodles. But, when you’re working for yourself, personal overhead can kill your business before it starts. The more money you spend on yourself and your lifestyle, the less you’ll have to invest in your business.

Related: A Note to Young Treps: Put Down the Ramen

2. “There are no right answers.” 
The problems you tackle in school are designed to have both right and wrong answers. When you start a business you can get good advice from experts, but every business is different and you may not know whether you’re right until your business flourishes or founders. You need to find a way to thrive without a clear path.

3. “Cramming won’t help you succeed.” Skills such as memorizing information and following a professor’s directions won’t get your business off the ground. It’s time to break out of the good-student mode and take chances. Stop meeting expectations and start exceeding them.

4. “Average is never good enough.”
You may have been able to pass a class by just earning Bs and Cs, but if your business isn’t scoring As, the competition will destroy you. Many of the best and the brightest choose to start their own businesses and you will be facing them for funding, attention and customers.

5. “It’s finals week all the time.” 
Plan on doing plenty of hard work and withstanding long hours. Starting a business means sleep may take precedence over going out and partying with your friends. For entrepreneurs, there are never enough hours in a day.

6. “Your degree doesn’t matter.”
It’s true that some schools take more time preparing young entrepreneurs for the start-up world, and the contacts you’ll make can help you down the road. But generally, where you graduate from won’t matter to venture funders or other entrepreneurs. Having a stellar idea and the ability to turn it into a reality is what counts.

7. “You’re on your own.”
In college, you have the advantage of learning from and questioning faculty who often have insights that help you understand a class. With your own business, it’s important to find mentors to talk you through obstacles. For guidance, draw on operations such as SCORE, which is a group of retired businesspeople. Or, check with your past professors or alumni groups for people who can lend a hand.

Related: A Good Mentor Will Tell It Like It Is

8. “Say goodbye to your old friends.” Maybe you chose your friends based on shared interests such as liking the same kinds of movies or a shared preference for the hamburgers over macaroni and cheese in the cafeteria. You’ll still want to have relationships, but your criteria will change. Old friends who move into salaried positions won’t understand your challenges as well as other entrepreneurs. Look for people like you so that you can compare notes and share approaches. Your social life, such as it is, should also include getting to know potential customers and suppliers.

Related: What to Do When Friends Want to Be Co-Founders

9.”You can’t skip work.”
To succeed as an entrepreneur, you must be present. You need to be there, committed and willing to work hard, every single day.

10. “Failure is OK.”
One F won’t ruin a college career, and one failure — or more — doesn’t mean that your next idea won’t take off. Keep working your hardest, modify your business or start another one, and you may graduate from this demanding school of business with a company you can be proud of.

This story originally appeared on Young Entrepreneur