This is a short entry today, but a powerful lesson. Over the past few months, I have been getting very nervous when having conversations around raising capital. I am not sure why, but it has been occurring and throwing me off in discussion. Last night, I brought this up to my business partner and he was able to share his perspective and give me some new insight on the matter.
My partner said, “Instead of trying to sell the deal in the first conversation, you should frame the conversation as an introduction to a potential investor.” Then on the second, third and fourth follow up, you can sell the deal. We went back and forth on this concept for a little while until I fully understood. Going into every meeting, my goal in my head was to get an investment. To leave the meeting with a check in my hand and a check on my to-do list, yet that just isn’t reasonable. Instead, my goal should be to have another meeting. To gain enough interest from the “introduction” that the potential investor wants to have another meeting. This is a very simple, but important change to make in my approach.
He then proceeded to tell me some other stats about selling. The one that stuck with me was that “80% of deals happen after 5 follow-ups.” 5 follow-ups!!! That is a lot, I thought. Looking back, I was only following up 1, maybe 2 times. My excuse was that I don’t like to be naggy or in people’s faces. He said that’s not the way to think about it, think about it as being persistent. He said, “You must be crazy to think that someone will just pull out their wallet and give you $50,000 for asking. If it was that easy, raising money wouldn’t be such a big deal to startups.” This is the same concept akin to asking for something from your parents that you really want when you were a kid. If you really wanted it you would ask a hundred times to your mom then to your dad then back to your mom till someone said yes. All in all, if you really want something, you have to be willing to go get it. If that is following up 5 times then that is what it takes. The worse that someone can say is “no” or “not right now but I am interested in the next round.” There really is nothing to lose.
The other part of the conversation was about how to follow up. Being a millennial, I often resort to the communication channel that requires the least invasiveness – email. My reasoning was that email is quick and easy to use, can be looked at and replied to regardless if the person on the other side wants to do it at that moment, and can be used as step to get a call. My partner, had a differing belief. He said that he has worked with millennials before in his past jobs, and this topic always came up. He said, “Millennials do all that they can to avoid the phone call.” I couldn’t disagree. He then proceeded to say that in reality phone calls are the way business deals get done. I knew he was right, knew that this was true, just needed the push to do it.
Going forward, I will take these lessons to heart and try to implement them in my round of fundraising. It is hard to change a habit, but when the other side of the coin is running out of money it is a forced change. With little experience in sales, all of this is new to me. My goal from the beginning was to learn as much as I could through this entrepreneurial journey. Thus, I will take this conversation as a learning experience and apply it over the next few months.