Garnering Investor Movement and Motivation

Why do so many conversations with investors move so slowly or don’t go anywhere at all. I observe the “cause” is largely a result of entrepreneurs and executives own shortcomings. There is a simple question to answer, can you (the entrepreneur or executive) convince the investor you can be of help, or will the investor convince you that you cannot.

  1. Mindset: do you see the fundraising process as adversarial (“taking” the investor’s money)  or involving shared responsibility (helping the investor achieve their own objectives). This why television shows such as “The Apprentice”, which largely depend on the former to drive television ratings, are a terrible example. Do you really want Donald Trump or Alan Sugar, as a business partner. Their track record with relationship-building would cause any sane person to run a mile.
  2. Effective Influence:  there are only three ways to influence an investor’s behaviour and two of them won’t help you.
    • Threat. You might move along their interest an inch by scaring them but you won’t gain their commitment. (“Your competitors are going to kill you if you miss this huge growth opportunity.”) It just results in hardening their feelings if they are resistant.
    • Peer Pressure. (“You are missing out on the next big thing”).You may cause investors to move a mile, rushing towards investments in these areas like sheep but rarely does it generate long-term commitment. For example, cyber risk insurance propositions, are garnering huge interest but very few are getting serious investment support today.  
    • Investor’s Self-Interest. An appeal to mutual self-interest is the only tactic that works to create movement and motivation to act. Why? The investor grasps how important your partnership is in achieving his or her own objectives or goals (future growth of the fund(s), improved image, attract higher quality returns and investors, a potential promotion or bonus etc). That is why fundraising cannot be a tussle but must be collaborative, where both parties visibly “win”, personally AND professionally.

I am publishing a paper, “The Five Myths of Investor Demands” next month. I’ll happily share my best tips by phone or email .

© James Berkeley 2014. All Rights Reserved.


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