With the upcoming TV show on Ten, Shark Tank, it’s an opportune time to explore what it takes to land a Shark – i.e. get one to invest in your business. I guess I should know, I’ve landed one. Twice.
It’s worth noting at this point that I do not consider myself a particularly good entrepreneur. My ability to talk shit is limited, and I am hopelessly honest. I enjoy solving difficult problems, and the reality with starting most businesses is that the difficult issues are solved early and then it is just a matter of grinding it out. Ergo – I am a shit entrepreneur.
There is one aspect of the start-up process I am good at, having said that. Raising money. That probably shouldn’t be a surprise given my professional background also centers on raising money.
So how does one go about raising money from sophisticated investors? Well, there are a few tricks to it, but the main one is this:
“If you need to raise money, then nothing else matters.”
If you don’t need to raise money, then don’t do it. As an ego trip, it is not a very smart one. You should be trying to keep as much of your equity as you can. However, if you need to raise money, then it needs to be your #1 priority.
At the moment, if you can’t raise seed funding within 10 pitches, something is VERY wrong… some suggestions:
- Your team is shit.
- Your product/service is shit.
- Your presentation is shit.
- Your presenting skills are shit.
- You are pitching the wrong people (your networks or your researching ability are shit)
The first two issues are potentially terminal, as they should be. The last 3 are totally solvable and if you kill the last 3, in this environment you could overcome the first 2. Color.com – case in point. Urrgh.
Why do I say that? Well, because I’ve seen heaps of other companies try to raise money. Pitching for months, some wear it as a badge of honour. That’s rubbish. If no money = no business then the last 3 must be your #1 priority. Your = the whole team.
In the next installment I will go through the anatomy of the start up pitches our team used to raise money from one of the people on the Shark Tank. The bones of the pitches were the same just the skins were different. I’ll also talk about what we did to bring it all together.