So Facebook is doing an IPO.
Raising 16 billion dollars or something.
Wow. Good for them.
Feeling sorry for yourself? Just starting out and don’t have two nickels to rub together?
That’s okay, ‘cause remember — Facebook was once a start-up too. Yes, just like you. Barely getting by; surviving week-to-week; begging for start-up capital.
So how do you raise money when you’re just starting out?
Glad you asked. Read on, ‘cause you’re about to discover 3 rules you must never break when asking for money to start your venture.
And yes, these 3 rules may seem like such simple advice. But wait a minute — why do I continue running into start-up founders who break every one of them?
Do yourself a favor: Learn these today so you’ll avoid looking like a fool tomorrow…
Rule #1 – Don’t tell me you’re going to be the next Google, Apple or by golly: Facebook.
Sitting there listening to the excitement and passion of an entrepreneur is fun. You see it on their face. You hear it in their voice. Love it. Passion, excitement, new ideas, all of it.
And then comes the “oh no, don’t say it” moment: They tell you they’re gonna be as big as Facebook someday. Ouch. Hate when that happens.
Yes, maybe you will be some day. But having unrealistic delusions of grandeur is not the best way to start. I mean, look at you now? Sitting in your day job, having never built a company before, dreaming of pie in the sky stuff. Asking for money just to get started.
Well, sorry. Not buying it. What’s the line in the Jerry Maguire movie? “You had me at hello.” You did, but then you went too far.
Now before you get all bent out of shape aiming to put me in my place in the comments section, please read this:
Your dreams are important. There is nothing wrong with dreaming. In fact, I encourage it. Hey, I even go there myself sometimes late at night lying in bed. But at the end of the day, you’ve got to come back to earth and be more realistic. Keep the “gonna be the next Facebook” in your pocket. And yes, you can share it with your spouse or best friend, but don’t share it with me. Especially since you’re trying to convince me to invest in your start-up company. Note: That’s start-up company.
So how do you do this one differently? I asked Nathan LiaBraaten, Founder of Concepture and former Relationship Manager at Vencore Capital, for his input. He told me this:
“Show, don’t tell. Show the investor how you will become the next big thing without actually saying it. Get the investor to come to the conclusion on their own, and then you’ve really succeeded.”
Rule #2 – Don’t be so worried about someone “stealing” your idea.
See it all the time. Going to meet a guy for coffee or lunch. Don’t know him, but over the phone he says he’s got the greatest idea ever in the whole history of the universe. And hey, lucky me, I get to invest if I want.
So, more intrigued than anything, I agree to meet him. After sitting for an hour trying to drag the idea out of him, I realize he’s never going to share it. With me, or anyone else for that matter. I could probably stand on a stack of Bibles 10 feet high, sign a 50 page confidentiality agreement, and swear on my father’s grave I’ll never tell a soul.
But will he tell me? No. He’s afraid I might steal the idea.
Okay, again before you start foaming at the mouth to write me a nasty comment, hear me out. This isn’t about having proper discretion and diligence. Yes, we need to protect our intellectual property. And yes, we need fancy contracts from attorneys that help us do this.
What I am simply saying is there are too many people running around with this mystical belief they’re the only ones to ever have an original idea. Well, I hate to burst your bubble, but it’s just not the case.
“Search” before Google? Yahoo and half dozen more sites.
“Social network” before Facebook? Um, is MySpace even still alive?
“Handheld devices” before iPod? Come on. Anyone remember the Palm Pilot with the silly little antenna?
Here’s the secret: It’s not your “idea” per se, it’s the execution of your “idea”.
In speaking with Dino Vendetti, General Partner at Formative Ventures and former Vulcan Ventures Partner, he summed it up this way:
“The world is filled with great ideas and people who can’t do anything with them. So it doesn’t matter if your idea is novel or not. What really matters the most is what you do with your idea“.
See? You’ve got to execute that secret idea of yours. And how you going to do it on your own? You’re not. You’ve got to share with others. You have to tell me your idea.
Rule #3 – Don’t tell me in the first 10 minutes: “Well, I hate to argue with you, but…”
You want my money, but aren’t willing to at least hear my advice? You sound like a know-it-all. Hello? I’ve got 27 years of bumps, bruises and bad dreams as an entrepreneur. And you do what for your day job where you work for someone else? Oh, and you’ve never had your own company before?
This one drives me crazy. Why? Mostly because of the ugliness of pride. So prideful you won’t even consider the input and wisdom of seasoned entrepreneurs. Guys and gals who have done it. Been through the trenches. Been through the war.
Now again, I am not saying we seasoned entrepreneurs have all the answers. Hardly. Heck, I learn something new every day. And yes, I’ve been wrong more times than I can count.
But that’s not the point. The point is the willingness to listen. The mindset of being open to suggestions. The willingness to be coached.
Seriously, no one likes an uncoachable person. Especially venture capitalists and angel investors. Hey, your family and friends probably don’t like it either.
Out of these 3 rules, I’ve watched this kill more potential deals than any other. And the funny thing is? Even when you tell them why you’re passing on the opportunity, they still don’t get it. They’re like: “Well, I hate to argue with you, but…”
Um, yeah. And no, you still can’t have my money.
When I tossed rule #3 by Nathan, he about jumped out of his chair and told me this:
“Coachability is the most important trait an entrepreneur can have. If an entrepreneur is not coachable, his or her chances of success go down exponentially”.
So here’s the summary all wrapped up with a tidy bow:
Have dreams, but be realistic and keep your feet planted on earth. Be open and share your idea with people who can help make it real. And for goodness sake, if you only learn one thing from this, please do me a favor: Be coachable!
The good news? You can do this. You’re now smarter today than you were yesterday. So take what you’ve learned and go make it happen. Seriously, if Mark Zuckerberg can do it, so can you. :-)
Okay, let me have ‘em. Shoot me your comments below.
Oops, one more thing. Are you and I connected yet?
I’m Eric. Husband, father & entrepreneur… (oh, and a writer on Forbes too.)
If you’re an entrepreneur, let’s hook up. Seriously. Here’s a killer formula:
Your Wisdom + My Wisdom = More Success.
My email is: eric at mightywisemedia dot com. Shoot me yours in the upper right corner above and let’s connect, okay? Together we can really nail this thing. :-)
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