Ultimately, to get money, you have to ask for it. Very few people hand over checks without being asked. If you find someone who does, call us.
When and how to ask for investment money:
(Hint: You may want to print this handy checklist and pin it up on the wall next to your desk.)
1. Qualify your investor by making sure you ask the right person for the correct amount. Don’t ask a multimillionaire for $5,000; don’t ask a millionaire for $500,000.
2. Ask in person if at all possible or telephone directly yourself.
3. Wait until the time is right, but don’t wait too long.
4. And don’t worry about playing your proverbial “chips”: contacts, favors, etc. Stale chips are worthless.
5. Take no for an answer. But not the first time you hear it. Try to turn the first no into a maybe and find a way to leave the door open.
6. If you receive a check in person, put it in an envelope rather than throw it into your pocketbook or briefcase. This behavior indicates your sense of responsibility for the funds.
7. Count on asking 100 people for every investor you hope to get.
8. Investors want to know what percent of the company their money buys. Make certain to have that information calculated and handy for different investment levels.
9. Set investment goals the way that universities set contribution targets – X at $100,000, Y at $50,000, Z at $1,000. Industry norms may dictate “units” of specific sizes, but even investment units can be broken down into smaller chunks.
10. Use your lead investors to open doors and keep them open. Once you get a single investor committed, that person has a stake in your success. Use that involvement to get other investors committed.
It’s the Gut, Stupid
When all is said and done, investors first and foremost use their instincts when making their decisions. If your business doesn’t match an investor’s instincts, there’s little you can do after you’ve done the obvious. Time to pick up your business plan and your smile and move on. Eventually, you’ll find investors that fit. And the ones that passed today may rethink their reactions when success comes knocking at your door.