Raising Money is another Exercise in Sales.

A lot is written about raising money for a startup. There are thousands of blogs that discuss the topic. There are pitch events where you can go to present your company and the opportunity your company represents. You can take classes on how to raise money. You can hire people to help you raise money. But, at its core, raising money is just another exercise in selling. If you have never sold anything, then recognize that you are selling when out hustling for capital. And selling is hard, and therefore raising money is hard.
 
Having raised tens of millions of dollars for different companies in different amounts, a quarter-million here and a million there. And having sold and built teams that sold large and small ticket software products over the years, I find the process of raising money to be remarkably similar to selling a new product for the first time.

Raising money like selling a product comes down to two things:

1. The system you use to sell investors on your idea and,
2. The act of selling (pitching your investors)

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Your System
Your system is the tools, the activities, actions, and routines you follow and do daily and weekly to drive your results.
 
As W. Edwards Deming has said, "85% of a worker's effectiveness is determined by the system he works within and only 15% by his skills." So, if you don't have a trackable and measurable process, then the default system is you, and the results will be unpredictable at best.

So, when raising money or selling for the first time, think about the system that will propel you forward and help get you in front of your target audience.
 
A little over a year ago, the system we used to raise $1.5 million was a simple one but effective. We brought together the team we would need to connect and engage with potential investors and

• We created a target list of investors that aligned with the company's vision and goals.
• We created a list of influencers or those who could connect us with other investors that we did not know but who fit our investor profile.
• We created the content resources  needed when engaging investors - a pitch deck and a company investment summary sheet, some reference letters, etc.
• We developed a comparison chart showing how our deal compared to others that these investors might be looking at to understand our competition for these investment dollars.
• We developed an outreach plan and determined the engagement cadence needed to create opportunity and find investors.
• Then we applied grit (a key component of all sales efforts). We called, emailed, conducted meetings. we did this consistently - weekly calls, emails, and discussions until we hit our number.
• After each meeting or conversation with a potential investor, I reviewed and revised our materials to align them with future investors' interests better so that the next time we presented, our chances of securing an investment improved.

 
It was a simple system. One that those that were working to raise the money could manage, measure, and adjust in order to become more effective. 
 
The Act of Selling
As indicated earlier, raising money or selling comes down to two things. The second item, the act of selling, is the fun part. At its essence, it's an exercise in storytelling. Below is the simple five-point framework I used to craft my story that I used when I presented to investors, and you can use to help tell your company's story.
Framework:

1. You show them the future where things are better because of you.
2. You show them how your ideas will make the vision become a reality.
3. You show them the outcomes of your vision and ideas.
4. Then and most importantly, you show them how you can be trusted to make these outcomes happen.
5. Lastly, you ask them to commit to you: You close the deal.

 
You sell a vision. You share an image of the future. You tell the story of how things can be better and where things are better based on your company and what you do. You paint the picture of something far better than the current state of the world. Remember, no one will endure the pain and trouble that accompanies change without a vision of the future. Investors and customers need to see a better, brighter picture of a future that is worth pursuing. They need a reason to change.

You sell ideas. A vision becomes a reality through your ideas. You share the idea of your values and the idea that is your unique view. You sell that, which makes a difference for those that use your offering. You sell the ideas that highlight the problems that exist before you sell the ideas that are your solutions. You sell the ideas for the change that is needed to make your vision a reality.

You sell outcomes. It isn't your solution that people buy; they pay for the outcome your solution provides. I use this analogy a lot: People don't buy drills; they buy holes. So, sell the outcomes that your customers need, making your vision of the future a reality. The vision, the ideas all add up to the outcome that the investor or customer desperately wants. And believe me, investors want OUTCOMES.
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You sell trust. This is the most important sale of all. You must show them how you can be trusted to make these outcomes happen. You show that you can be counted on to ensure that those outcomes are achieved. You show that you are the best, the most capable, and the most dedicated person to partner with to help your investors achieve their return.
 
To win the opportunity to receive an investment, you have to be the person that your investor trusts the most to help them achieve their desired outcomes. Your investor is choosing a business partner. They are hiring someone they trust to own a result that they want. They need that trusted partner. A trusted partner lets them sleep at night.

You close. When they see you as a partner they can trust, you then ask them to commit to you and to give you the money (you close the deal).
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Selling anything comes down to two things – a system and a story. Make sure you have both.

Click here, to learn more about the Exponential Boot Camp for Startup Sales, 

​Written by Tim Bates
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