What’s the one thing I should do to raise capital?

Earlier this week I had a talk with an entrepreneur (we’ll call him Ben) who has developed very interesting internet technology in the Web 2.0 space. I think that he’s really onto something and he has the perfect experience to take such a company forward.

Ben contacted me to get advice on raising equity capital. Ben is very, very passionate about this business, and he certainly convinced me that the technology was in the ‘hot and sexy’ category

Here’s how the conversation went…

Me: “Great Ben, you’ve got me excited about this technology, now tell me a little about your test run. What did your customers have to say? Did they find it easy to use? What did they think of the price?”

Ben: “Yep, they loved it.”

Me: “Hmm… can you give me a bit more detail? What exactly did they like?”

Ben: “What do you mean? Don’t you think this technology will be a winner?”

Then Ben proceeded to tell me again how good the technology really was. He seemed to think that I was not convinced and if I just understood how it worked then I’d be sold. He pulled out his computer to give me a demo. That was the last straw for me.

Okay, I needed to go back to the start. I spent about 10 minutes talking about how investors make decisions and what exactly they look for when making investments in early stage companies.

But to no avail. My comments just went straight over his head.

Listen to Your Advisers

The ‘thing’ that Ben did not get is that you need to LISTEN to those you seek advice from.

You get very close to your technology/idea and it’s hard to understand why others don’t share your passion and enthusiasm for it’s potential. The reaction is to keep hammering home how great the technology is. But that doesn’t work.

Ben was right to ask for advice but the trouble was that he didn’t listen. He had his own ideas about how to convince an investor and that was that.

By the way, Ben wasn’t being stubborn. He genuinely did not see that he ignored just about everything I said about how to approach investors. He literally had a mental block.

Before you even go anywhere near an investor talk to people who have ‘been there, done that’, and listen to what they say to you.

Common Ground

I know that every situation is different but, believe me, there is much more common ground in this environment than most entrepreneurs think. It is a real trap to put yourself out there as ‘unique’ and the normal rules don’t apply. Too many entrepreneurs have had to ‘get a real job’ with that attitude.

I’m not suggesting that all the advisers will be right for your particular situation. At the end of the day the only test is to give it a go. Having said that, you’d be foolish not to listen to other entrepreneurs and advisers who have been around for a lot longer than you.

They may not be cool but they have a lot of war wounds and maybe they can save you from a few as well.

Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site https://pitchingtoinvestors.com/ with tools and tips about how to develop killer presentations to raise capital.

To read more Gail Geronimos blogs, click here.