| The majority of investors would rather keep their | | | | Remember the golden rule. Investors invest in |
| money than trust their money to someone else | | | | people more specifically investors invest in the |
| so what does it take to convince an investor to | | | | team. Venture Capitalists have been quoted as |
| invest? | | | | saying they would rather invest in a B class |
| On the basis that investors start from a position | | | | product and an A class management team than |
| of No when asked to invest what can you do to | | | | an A class product with a B class management |
| influence that decision (assuming that all of the | | | | team. |
| business basics stack up)? | | | | Getting an investor to invest is like a courtship. |
| You Can Harness the 6 Universal Principles of | | | | You are planning to have a long term relationship |
| Influence. They Are: | | | | with this person so it is important to understand |
| First: Reciprocation. People give back to you the | | | | what they are looking for and it is important for |
| kind of treatment that they have received from | | | | you to communicate your plans to them. Not |
| you. | | | | necessarily at the first meeting but certainly |
| Treat the potential investor with respect. Do | | | | before the actual investment is made. |
| some research on them, find out what they like, | | | | Consequently you need to start meeting potential |
| what they have invested in previously, what | | | | investors, business angels and Venture Capitalists |
| causes they support and if possible what their | | | | long before you actually need the investment. So |
| values are. | | | | get networking. |
| Second: Scarcity. People will try to seize the | | | | Lastly: Consensus. People will be likely to say yes |
| opportunities that you offer them that are rare | | | | to your request if you give them evidence that |
| or dwindling in availability. | | | | people just like them have been saying yes to it. |
| You might have a position available on the Board | | | | It is easier to get the second investor than the |
| for an appropriate investor. Maybe you are looking | | | | first. Second round funding is usually easier to fill |
| for a limited number of investors and you only | | | | than first round funding. This means that you |
| have one or two positions left. | | | | need to identify other businesses and/or |
| Third: Authority. People will be most persuaded by | | | | investments that are similar to yours, perhaps in |
| you when they see you as having knowledge and | | | | another marketplace or geographic location which |
| credibility on the topic. | | | | have received investment funding. |
| Preparation is the key. You need to know your | | | | Alternatively or in addition to the above you need |
| product. Your marketplace. Your competition - | | | | to have a strong board. If investors see that you |
| yes you will always have competition - if you | | | | have been able to attract a strong board then |
| think that you don't you have not done your | | | | those people are making an investment of time, |
| market research well enough. | | | | energy, effort and knowledge and that meets the |
| Fourth: Commitment. People will feel a need to | | | | consensus requirement even if the contribution is |
| comply with your request if it is consistent with | | | | in a different form. |
| what they have publicly committed themselves to | | | | Often it is easier to get people to become |
| in your presence. | | | | members of your board in the early stages than |
| Remember that presenting to an investor is no | | | | it is to get funding, therefore it is worth focusing |
| different than making a sale of your product to a | | | | on that in the early stages. This has the effect of |
| prospective client. You need to identify what the | | | | preparing your business to be attractive to |
| investor is looking for, ask them if they are | | | | investment at a later stage, expanding your |
| prepared to invest if all of those concerns are | | | | businesses network meeting the fifth |
| met, then show how your business or investment | | | | requirement, demonstrating that you and others |
| opportunity meets or exceeds each of the | | | | are showing commitment - the forth requirement. |
| identified items. If you can do that you have | | | | Where do you start? Start applying the principles |
| eliminated all of their concerns regarding | | | | in your everyday life, your business and then |
| investment with respect to your business, so it | | | | when you do start interacting with investors |
| comes down to the fifth point. | | | | these will come naturally to you, thereby |
| Fifth: Liking. People prefer to say yes to your | | | | positioning you and your business or investment |
| request to the degree that they know and like | | | | opportunity it its best possible light to Entice and |
| you. | | | | Investor to Invest. |