5 Ways Raising Money Is Just Like Asking for a Date
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The worst-kept secret among startup founders and investors is that “fundraising is a lot like dating.” You’re suppose to do things like “play hard to get”, be choosy, have them chase you, etc. I'm not the best fundraiser myself, plus I take everything too literally, so I decided to put this theory to test! Before embarking on Buddytruk’s latest round, I decided to read a book, but not one on fundraising or the art of negotiating (no, not “The Art of the Deal”, sorry Donald!). Instead, I chose a book on "attracting women," to see if the rumors were true and I could apply my "dating skills” on investors. The result, we closed our round in 10 days, and were oversubscribed.
Surprisingly enough, there are actually dozens of parallels between the two. In this article, I’m going to share with you the top 5 things that raising money, and dating, have in common, and how to apply them the next time you’re fundraising. **Disclaimer - this article is not meant to be sexist, nor geared toward men only. These truths are universal, and every founder, female or male, can use to be more successful in their next fundraising effort.
1. First step is belief.
In order for a woman, or man, to find you attractive, you first have to find yourself attractive, right? The same is true of your startup. If you don’t find your startup “sexy”, or if you wouldn’t invest in your startup yourself, why should anyone else?
2. Disqualify yourself.
They say the only guys who get beautiful women are the ones who “disqualify” themselves as potential suitors. Most beautiful women get hit on everyday, by men whom (they believe) are not worth their time. When you approach a beautiful woman and immediately begin to hit on her, what’s she going to assume? She’s going to assume you’re like every other guy, and ignore you. The same is true of the top angels and venture capitalists. How many times a day do you think Mark Cuban is asked for money? How many cold emails a week do you think the partners at Sequoia Capital send straight to trash from startups asking for funding? If you reach out asking for funding, they’ll assume, like every other startup, that you need them more than they need you. You’ve just placed their value above your own, and told them “you’re out of my league.”Instead of asking for money, ask for advice. You have a great young business, you’re growing fast and making the necessary adjustments, and you just want someone to bounce some ideas off of. Since angel investor X invested in similar company Y, he/she understands your space, and you’d love to hear their thoughts on this new strategy you’re implementing. There’s an old saying that goes, “Ask an investor for money, and they’ll give you advice. Ask an investor for advice, and they’ll give you money.”
3. The “survival and replication” philosophy.
We, as humans, are genetically hardwired to “survive” and “replicate.” As Darwin-istic as it sounds, our main purpose in life is to live long enough (survive) to pass on our genes (replicate). It is human nature, for women (and men) to align themselves with men who enhance their opportunity to survive and replicate. This is why you’re always hearing that most women are attracted to the “alpha male.” Investors are hardwired the same way, but with their money. They want to protect the money they have (survival) and invest their earnings in opportunities that have the best chances of helping that money grow (replicate). The better your company is at providing returns to their investment, the more investors will want to align their money with your startup.
Women are attracted to men that other women find attractive. The same is true of investors and startups. The more investors talking about how great your company is, regardless of whether they invested or not, the more attractive a new investor will find your business. You always hear investors asking questions such as “who has already invested?” or “how much of the round is committed already?” If several other people already think your startup is a good investment, it makes it much easier for a new investor to rationalize the same.
5. Appeal to emotions.
Speaking of rationalizations, investors are emotional beings. Clearly, with choices such as who to love, decisions are hardly rational. However, there’s ample evidence out there to suggest that decisions are never made rationally, including investors deciding where to put their money. (For more info as to why this is the case, you can refer to an earlier article I wrote here.)In books on the “art of seduction”, authors will commonly talk about how if a relationship feels right to a woman, she will often use whatever logical reason she can to justify the relationship. Investment decisions are made no differently. If an investor feels like your company’s a winner, they’ll create a thousand different reasons why it was a logical choice of investment. This is why it’s so important to bring passion into your pitch, and communicate that what you’re doing at company X is so much more important than generating a return.
My friends at Clutter, a self-storage startup, told investors during their last fundraising stint that “Our company is so revolutionary, we’re on-pace to replace 1 self-storage facility a month!” As you can see, what they were pitching wasn’t a fast-growing storage business, but a fast-growing storage business that was changing storage! By the way, did they get funded? At the end of the day, you can’t meet your next girlfriend, or raise your seed funding, by reading books. As a pickup artist would say, “the game is played in the field!” Therefore the only way to increase your fundraising skills, is to always be fundraising! You must be talking to investors all the time, not just when you need money. (In fact, talking to investors only when you need something is the exact opposite of what you should do.)
The goal is to master the “skill” which is fundraising, not to “raise money.” Once this skill is mastered, you can turn it on whenever you please.