The Stranger Things of Closing Investors
Spoiler alert: this piece was inspired by Stranger Things – proceed with caution.
I’m often asked how to close investors. To be honest, the way I do it is a bit upside down from what I know to be the norm.
The norm that I see from myriad startups is to make as much noise as possible and pitch every perceived investor they can find before even having a real conversation, almost as if these investors are simply test subjects to be experimented on.
With the assumption that fundraising for a startup is normally done by the CEO, the CEO’s job almost 100% of the time is Customers and Cash. What that really comes down to is another form of business development, and with business development
To be truly successful at business development, you need to know yourself and your “BD style”, which derives from your personality. It’s one of your “powers”, in addition to the ability to move things forward, and to have people see what you want them to – your vision.
Me, I’m a relationships person – that’s my power. I’ve known that for a long time.
Relationships are built on trust, and trust takes time. It can take months, realistically, but that’s ok because my authentic reason is to make a good connection overall, I’m able to forge trustworthy and longstanding connections. It’s not about the money.
Strategically, this works to my advantage in more ways than one. We have to remember that most Angel investors are investing in early-stage companies. Early stage companies can be somewhat hard to gauge; there are so many variables, and seeing a return on investment takes five to seven years on average. The longer it takes, the more variables there are that could become the roots under your pumpkin patch, causing you to pivot or fail, or hopefully to become your tunnels toward success.
To battle the shadow monster of failure, investors will generally put the heat on you. They need to trust that you can get through adversities and make strong decisions that will allow you to defeat the demogorgon and find success at the highest levels; it’s not so much about the concept or the business, it’s more about if they believe in you.
Of course, if you take the time to build trust and make a real connection, your job is made that much easier.
Once trust is established, you need to maintain and nourish the connection through open and ongoing communication. These relationships could last a very long time and you never know what opportunities can arise, especially if you are able to show them a
return along the way.
Part of the point of bringing on investors is that their wisdom and connections are invaluable. It’s been my experience over the years that my investors (and advisors) end up being the best connections for my businesses during the startup phase. They will guide you and get you the help you need, so that you can stock your fridge full of Eggos.
What’s more, if you make a strong connection, most Angels know other Angels very well and bring each other into deals that they really believe in. If you have built a foundation of trust, they are far more apt to spread the word. Boom, you’re job is made all that much easier, again.
So don’t be afraid to be like Eleven. Be quietly strong and work to understand your power. Use your powers, and utilize the amazing connections and relationships you build to lift and move your company to success.
Paul Brassard, Managing Partner
An entrepreneur and innovator from a young age, Paul has extensive experience in fundraising, investor relations, and working with startups. With a knack for systems analysis and an ability to leverage his knowledge, networks and business acumen, Paul is a respected consultant and mentor in the Vancouver startup community.