4 Ways To Get Better At Asking For Money
For many of us, asking someone for money is one of the most awkward conversations we can have, especially when seeking investment for our startup.
Nervousness, anxiety, confusion, and stress are a few of the common emotions that float around when having these conversations. The source of these emotions are closely linked to our questions around our self-worth, as well as society’s perception of our worth as a commodity. Conversations about receiving money that’s funding our startup or passion project challenge us to question how valuable our contributions are, and bring up any remnants of imposter syndrome to the surface.
If you’ve spent any time in your career doubting your worthiness, I’m here to tell you that every entrepreneur and public figure has had these same questions and fears. Here’s proof. Now that you know that everyone has these worries, let them go.
The difference between the entrepreneurs who do well with asking for money and those who don’t is that the ones who do well simply make the decision to look at their self-doubt and run past it. There is not an absence or lack of fear in this group, just a persistent stubbornness to march on despite its presence. When you realize that this simple shift in perspective is the sole difference that separates confident money-askers from everyone else, you’ve overcome 50% of the battle of asking for money more confidently.
Now for the other 50% — here are some tips and wisdom I’ve learned over the years that will help you ask for money from investors and customers with more confidence:
In-Person Meetings Are Milestones
When a prospect is willing to meet you in-person, it’s often after they’ve conducted some research on you, your startup,and have made the decision that they like what they are seeing and reading. In-person meetings are an opportunity for your prospect to fill in any gaps they have in their image of your startup and to gauge if they like the team behind the startup (see “People Give Money To People That They Like” below for more on this). In-person meetings are important milestones because they don’t happen if the prospect has less than a 50% interest in engaging with you or your startup (this does not apply to in-person meetings that happen because of personal favors).
Therefore, in-person meetings are the deciding milestones where your prospect adds or subtracts percentage points according to their interactions with you during these meetings. If the prospect enters an in-person meeting 70% interested in investing, a likable founding team and a killer pitch presentation may add 10 percentage points to the startup’s overall score. As a colleague of mine so wisely explains it, in-person meetings are where you walk your prospect towards or away from investment — the direction they go is up to you.
Ask For Money And Follow It Up With Silence
When someone gives you money, they want to be confident in their investment. As the individual or startup receiving the investment, it’s your job to dissect howyou pitch your investment asks so that the prospect is confident that you’re confident in what you’re asking for. An easy hack to accomplish this is to order your ask in the following way:
This is what we’ve built and accomplished so far.
This is what we need funding for.
This is what the funding will accomplish and the results it will provide.
This is how long it’ll take to see results.
This is how awesome the results will be and the people who have already made an investment.
This is how much we’re raising and this is how much I’m asking you for.
It’s key that the amount you’re asking for is the last part of your pitch, and that you say nothing after you’ve made your ask. The reason for this is that if you add #1–5 anywhere after #6, it diminishes the confidence of your ask and conveys that you personally need reassurance of your ask by repeating your support points again. Do not do this. Make your ask and wait for a response from your prospect; they will clearly tell you how they feel about the investment opportunity whether it’s through a ‘hell yes I’m in!’ or a series of questions. Your prospect’s response to this silence is telling in it of itself and is worth doing even if it’s just to see how they react.
People Give Money To People That They Like
In every scenario where a company or an individual receives a large sum of money, they undergo an application process as well as a phone or in-person meeting. Courtships with large investments require these 1-on-1 touchpoints simply because the investor wants to make sure that they like you. Emotions underlie every financial transaction, whether it’s an iPhone that you’ve been coveting, or a pair of shoes you’ve been wooed by — these purchases are all motivated by a state of mind, comfort, or emotion you want to achieve. The same emotions are in play when an investor is investing in a startup, except it applies to how the investor feels about the founding team in addition to the startup itself.
So before you walk into an investor meeting, do some research on your investor and find topics, interests, and passions you can connect on. Find the foundations upon which you can build a bond with the human being on the other side of the table.
Money Is A Tool That Separates The Right People From The Wrong People
No’s become as welcome as yes’s when you view money as a tool that separates the right people from the wrong people. When you arrive on a number, whether it’s an investment amount or a price for a product, it’s a reflection of not only how you value what you’re selling, but also your associated value of the people who you’re selling to. Therefore, if your investment ask is rejected or asked to be heavily negotiated, it’s a clear sign that the prospect in question is not aligned with the value of your startup nor with the vision you have for it. When you assign a number with a clear investor type in mind, use your ask amount as a ‘North Star’ that helps you separate the high-value investors from the low-value investors.