Need Investors? Go to People You Know

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

More from Stealthmode

• Ten Things You Need to Know About Hashtags
• How to Go Forward
• Google: No Need to Shlep Your Laptop
• Granddogma Goes to Bar Camp
• You know me: I can't wait

Stealthmode Recommends

• Response to Thoughts on Gangplank (Chris Conrey)
• How to do Customer Service Right (Chris Conrey)
• Thank You (Chris Conrey)