Part three of a 4-part series on the nitty-gritty details of actually (really) getting crowdfunded.
Whew! We made it through part one, the serious details of getting funded; part two the options for capital raising you should consider, and what each one could mean for your business. But you aren’t quite done yet, as if the work of an entrepreneur is ever done anyway. Now we can move on to the topic of learning the language. While this may not be as detail intensive, it is every bit as important as the first half of this series.
Walk the Walk, Talk the Talk
Financial and business literacy is incredibly important… more important than how well you can show off the features of your invention. Yes, really. I know your invention, your baby, is the center of everything you are doing and it is the sole purpose for this path. But this path goes nowhere if you don’t understand business or money enough to help it survive.
Master entrepreneur connector, Dave Phillipson told me, “Money is a language just like English, Spanish, Chinese, German, etc. It’s common sense that if you know the language well, you’ll fare better in that environment. Money is the language of business, so you’d be smart to find a place that teaches the “language of capital” and surprisingly, it’s not happening in MBA programs.” With that being said, let’s talk about how you can get the language right, to speak investor, not inventor, for ultimate success.
Get Your Pitch Language Right
It’s not enough to just present your business plan and talk about your idea. “You need to speak the proper capital language, address the investors, and you will see them respond.,” says Berny Dohrmann, Founder of CEO Space International. In your pitch, the financials not the product, should be front and center, as in first page, rather than shoved somewhere in the back of your presentation. In addition, you need to be able to present those financials with a complete understanding of what you are talking about. Your potential investors want to hear how you plan to win for them, period. The rest should take a backseat to your deep understanding of business. Nothing else will hold the attention of investors quite as much you proving your plan to get their money back to them. The more confident you are in the details, the data, the numbers, and the potential, the better your chances are at getting funded.
In an interview with Aaron Young on The Unshackled Owner podcast, Bill Kelly, a successful entrepreneur, board member, investor, and advisor had this to say, “You have to start putting yourself in the seat of that person you’re going to and imagine what it’s like to see ten of deals a week or whatever it is they see. One of the biggest mistakes that entrepreneurs make is assuming that everyone sees the world the way they do. By the time you’re out there asking for money, you’ve been spending so much time thinking about the idea and figuring out who you’re going to sell it to and how are you going to manufacture the product and how you’re going to merchandise it at retail.”
Get Your Team Right
When you take this journey with people, the people will affect the journey, there is no question about that. So it’s up to you to make sure you’ve thought this out, and have assembled a team capable of, and with the right mindset to, focus on and implement the plan you have for your business. If the long-term goals don’t align, the short-term goals won’t either, which spells disaster every single time. A lot of inventors and entrepreneurs have a very fixed DIY mindset so delegating can be difficult. I get that. But you have to understand that you cannot and should not do everything yourself. You should, as the inventor, work your strengths and focus on building a strong, diverse team to handle everything else.
Get Your Support Right
I have been fortunate enough, throughout my career, to rely on a few mentors that truly changed my life. I don’t know where I would be without those people. You need a mentor, at least one. When you are in this process of your business, most of the people around you who may offer up advice fall into one of two categories. Either 1) they have no knowledge of business and are giving unsolicited advice based on things they’ve overheard from an episode of Shark Tank or a ‘gut feeling’ or 2) are total yes men who aren’t invested, don’t care, and repeatedly tell you what you want to hear because, what’s the difference? Mentors are honest, they have knowledge in the areas you need insight, and they have no problem sharing that honesty or wisdom as needed. A great rule of thumb I heard from Manny Fernandez of Dreamfunded, “Don’t take advice from people unless they are writing you a check.”
In addition to a mentor, there is other support you will need through this process to make sure you are dotting the i’s and crossing the t’s. Like your attorney, for instance. Do not hire a divorce attorney to assist you in your plan to raise capital. The SEC will not be amused by this should something go wrong, and you won’t be either. Find a full-time securities attorney. Do your homework, make sure they only do securities work, and have liability coverage. Protect yourself, compliance matters.
Secret Tip: Expert crowdfunding compliance trainer, Berny Dorhmann recommends that you “ask the attorney if they check ‘yes’ on their insurance liability form for Security Practice. They will only pay that premium if they are doing this work full-time, therefore making the cost worth it.”
Get Your Story Right
When you are genuine, and you believe in what you are pursuing, it comes through. This is something that can’t be faked. Your story is one more element of this passion and authenticity, allowing you to organize, sequence, and share your idea in a way that brings about the right emotions, at the right time, to get others on board with your vision. Consistency is your best friend. Once you’ve written your story, and branded the details, the more you tell it- the better you get at telling it. Your story is the core of your business, it is the why to your how, the bread to your butter. It should be concise, memorable, and consistent with your business model and pitch.
Next Up: PART FOUR of Everything You Need to Know About How to Get Funded – Listen Up Ladies: Here’s How You Can Get Funded Too
Read the original INC article published on March 6, 2017.