Capital Raising Is a Sales Process, What I Learnt From Raising over $3Million in capital.
I have pitched Scrunch, literally, 1 billion times.
To investors, to customers, to employees… to random people when they ask what I do for a living.
And that’s probably the thing I attribute to our success. If you’ve got ears, I’ll try and sell you Scrunch.
When people ask me about anything to do with capital raising (or sales) I tell them, you’ve got to be willing to talk to more people than anyone else.
And while I could end the article right there, I thought I’d share a few other things I learnt from raising over $3Million in capital.
The Synergy Between Capital Raising and Sales
In my opinion, the process of raising capital is the same as making sales in your business. You’ve got to research potential investors, you’re reaching out to them cold or finding ways to get introduced to them, you’re pitching, you’re following up and you’re closing the deal.
If you approach capital raising like you would your selling process, it helps to create some structure around it and take a teeny bit of emotion out of it.
Because it is emotional, it’s your baby, and a LOT of people are going to say no.
Building Investor Relationships
Building strong relationships with potential investors is paramount. I have found that establishing connections with investors is similar to cultivating relationships with customers. It requires showcasing a deep understanding of the market, presenting a well-defined business model, and effectively conveying the growth potential of your venture.
Invariably, you will be reaching out cold to a lot of investors. And there are plenty of investors that prefer to invest in people they know. So you’ve also got to recognise that some people you speak to may not come in in the first round you approach them for, you’ve got to play the long game (just like with customers) and if it’s a no… keep nurturing the relationship.
Understanding Investor Needs
Just like when you are pitching a potential customer, you need to take the time to understand the needs and motivations of potential investors. By gaining insight into what investors seek, whether it's a specific industry, growth potential, or a strong team, entrepreneurs can tailor their pitch to meet those needs.
Craft a Compelling Value Proposition
A compelling value proposition is crucial when pitching to investors. Much like the sales process, where a unique selling proposition (USP) distinguishes a product or service, entrepreneurs must clearly articulate the value their venture offers to potential investors. By emphasizing the market opportunity, competitive advantages, and potential returns, entrepreneurs can effectively communicate the value and attractiveness of their investment opportunity.
Tracking Conversations
Another important aspect of the capital raising process is tracking conversations with investors. This practice, often overlooked, can provide valuable insights and contribute to a more systematic approach. By recording details of interactions, including key points discussed and any commitments made, entrepreneurs can build stronger relationships, ensure follow-ups, and maintain a proactive approach to securing funding.
As a sales-person at heart, this, coupled with being willing to talk to more people than anyone else, is how I encourage other founders to approach the capital raising process.
But now let me speak my truth to you my love. I love sales. Capital raising sucks. With sales, you are really solving a problem for someone and when they say no you can use that data to perfect your pitch. In capital raising, investors say no on a whim and for reasons that you can’t always optimise for. And that can be really f*cking tough.
So if you are in the trenches right now, or about to jump in. Kudos to you. I hope some of these tips makes the process a little easier for you.
Just don’t you dare give up until you get everything you want.
