Asking For Referral Investors

You are on a mission to fund your startup.

You meet someone.

So naturally...You ask for investors.

But you are asking the wrong question.

You should be asking yourself something very different.

It's not as much about HOW to ask but WHEN.

Funding cheat code: AFTER you have added value.

You should be asking yourself how you can add value to the person you want to open up their network of funder friends to you. Or at the very least how you can demonstrate that you are the founder worthy of receiving support.

(BTW Funders always have investor friends. We don't like to invest alone. We tell our friends about our investments since we want them to join us or at the very least want to look good in front of them. Sophisticated bunch, I know)

You being fundable is not as important as being backable. Fundable means you have a great concept and are the right founder, right now to take it to market success. Backable means that individuals, groups and even large private funding groups will back you and make sure you don't fail.

Make sure you don't fail. Think about that for a second.

The best founders are able to harness how the game of capital is rigged by getting backers that won't let them fail.

It takes a village to build a venture...

This is better for two reasons:

You are far more likely to receive out of the box and alternative types of capital support (think about all the non traditional capital types: public, government and city capital and more) like from single check writers, exited founders, family offices, private equity, etc

Second: Backable means that EVERYONE that meets you wants to open up their relationships (funding sources) to you AND resources to you. Going to take far more than just capital to fund your venture.

Capital is not just cash, but also clients (lots of them), channel partners (one to many's, think pipelines of clients) and a building a world class team (most important ingredient to winning, unless you think you are going to do every job in your company for ten years).

How do you know if you are backable?

It's an energy, you can feel it when people respond to you by excitement about you and your venture. And they want to follow through to make it happen. They feel the energy of enrollment from you, that you will stop at nothing and that you are going to make it.

It's far more about YOU and the work you are doing on you than it is about your venture. Your startup is a vehicle. Great founders can switch up the vehicle and they always seem to make it across the finish line.

Some will even be coming by steam engine, slow and steady but they laid the track so make no mistake about it they are are going to make it. (Shoutout to the founders who are quietly executing, gathering clients, plotting and planning with the discipline and patience of the gods).

Backable founders know how to enroll.

Back to wanting investor referrals: Remember something that is true of all humans: We like to look good.

Do you hand over your most valuable assets the second you meet someone and they ask, or essentially demand it from you?

If there is one thing that turns me off from a founder other than a lack of ownership (makes me think you can't be trusted with my assets, since you don't own your choices) it is definitely entitlement.

Why is it that founders sometimes forget all common sense and people skills when they are thirsty for investors? (Go read How to Win Friends and Influence People, still the best book on this after a century).

Investors you meet will only refer you to other investors to the degree of trust, excitement you can instill in them and by the degree of how much it will make them look good to bring you to their relationships.

Many of you believe you are just one investor away from venture nirvana.

One investor is not going to save your startup. That is not how the game is played or rigged. It's a fundraising illiterate founder that thinks one investor is what will fund your company. It will many, dozens or more, think of it is as a capital stack and daisy chain (more on that another time). Come join our fundraising fluency sessions weekly to learn more.

Money is not your problem. You are.

If you knew you were running for president, would you burn key and influential relationships?

Then why would you burn investor bridges by entitled, thirsty investor referral breath? The investing world is very small. We all know each other, and hang out. Investors come to our family office and high net worth events and talk.

Everything, and I mean everything you need to build in your startup comes down to people.

Everything you want is going to come by and through people. Show some skill.

Relationship first, founder. Build for the long term, and play the long game.

#fundraising #founders #startups #venturecapital #investors #capital