Gaining the interest of investors means gaining both their emotional involvement and financial confidence. The traditional methods such as idea-pitching and writing exhaustive business plans are weak approaches that can leave solid business ideas unfunded. In The Six Secrets of Raising Capital, Bill Fisher provides a model for reeling in investors. Good stories, rather than good ideas, are what draw investors into new opportunities. Winning business narratives are built on facts, conflict, and the promise of a happy ending.
Fisher believes that:
- Stories, not ideas, get funds. Investors are looking for good stories, with compelling heroes and villains. A business narrative is fact-based, memorable, and right to the point. It also has a happy ending.
- Bulletproof is better than a business plan. Nobody has the time or interest to read a business plan. Instead, a one- or two-minute bulletproof speech based on high credibility and expertise provides the best bet to interest investors.
- Money has personality. Angel investors are everywhere, in both informal and formal relationships. Whether working with a group of casual investors or with hedge fund managers, entrepreneurs should identify the right group of investors for a particular start-up.
- Investors like to be romanced. Investors are a lot like dates; entrepreneurs meet with prospective investors, get to know them personally, negotiate a relationship, and either form a partnership or break up. Toxic personalities in business, as in romance, must be strictly avoided.
- Capital can crash dreams. Negotiating the nuts and bolts of investor funding involves two categories of needs: economic and control. Both entrepreneurs and investors seek to secure the best financial return for themselves while also attempting to gain as much control over expenditures and operations as they can. Learning to negotiate from a point of decisiveness and firmness while maintaining politeness at all times is the best strategy.
- Deals do not close themselves. The entrepreneur is responsible for micromanaging the closing of all deals and ensuring that funds are wired by investors.
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