Need Investors? Go to People You Know

by francine Hardaway on September 22, 2009

Shoutout to @dgurrie and Sheila Kloefkorn of KEO Marketing for the inspiration for this one. Because of my female angel post on Marty's blog yesterday, I got a tweet from @dgurrie asking me how to get investors.  And then I got an email from Sheila asking me to contribute to Eileen Rogers' project to build a well in Mali, Africa for schoolchildren sick from dysentery. Who is @dgurrie, who is Eileen Rogers, who is Sheila?

Dani is a woman from Maryland who follows me on Twitter. I don't know her, and my advice to her was "go to people who know you."  I didn't mean it unkindly. It's just true. The likelihood of getting investment from someone you email with a business plan out of the blue is next to nil.

Eileen is a woman who goes on philanthropic trips to Africa as I have. Sheila is a mutual friend of Eileen's and mine. I will donate to the well because Sheila asked me and because it's Eileen's project. The merits of the projects may be equal (I have no idea what Dani's doing), but I will always choose to invest in someone I know. I probably won't even ask details of the project. I trust Eileen, and I trust Sheila.

The long and short of it: people are investing in you when they invest in your company, your project, your cause. That's why it's so tough to get people to do it.  No one likes to give up their money. And giving it to a stranger is unthinkable, even for professional investors.

Think about it for a moment. If you are a VC, you are probably using someone else's money. At the end of the day, you have to account for them about how and why you spent it, and they will ask the tough questions.  If you are an angel, you are using YOUR OWN MONEY, and you aren't likely to want to lose that, either.  So you have to know as much as possible about the person who asked you for it.

That's why the first round of investment, the round I'm usually asked for –the round that seeds the company, is usually done by that class of investors called "Friends, Family and Fools."
Those are the people who, if your company goes nowhere, or outright fails, will still love you at the end.

Posted via email from Not Really Stealthmode

{ 6 comments… read them below or add one }

dgurrie September 22, 2009 at 8:18 am

Hi Francine – thanks for your feedback. I appreciate your honesty – and I do agree. My problem is that I don't actually “run in circles” of people who have tons of money to invest. But I'll keep looking – and I'll keep networking – and I'll keep trying to “meet” the people who have the potential to partner with me in my business…I think that once they meet “me” then it will be easier for them to catch the passion I have – which is very contagious!

Maybe one day we can “meet” and then you too, may be interested in what I am doing!

Have a great day!

Mike E. September 22, 2009 at 1:36 pm

Hi Francine – thanks for the advice. I would also add that even when you go to people who know you, make sure they are “believers.” Not only in your concept, but in you as well.

hardaway September 22, 2009 at 1:55 pm

There are many places to meet people who can later become your investors. Industry conferences, trade shows, even Little League games. The idea is just to expand your network.

hardaway September 22, 2009 at 1:56 pm

Right. And I forgot to say that the best investor is no investor — customers are your ideal investor.

sheilakloefkorn September 26, 2009 at 3:24 pm

Thank you, Francine. Great post about how important connections are! Thanks for your trust and let me know what I can do to help you.

Anonymous September 26, 2009 at 10:24 pm

Thank you, Francine. Great post about how important connections are! Thanks for your trust and let me know what I can do to help you. @keomarketing

Leave a Comment

Previous post:

Next post: