Many entrepreneurs fail to attract the funding they need because they fail to put themselves squarely in the shoes of their potential backers.
Most funding pitches are jam-packed with information about the company, its products, markets and management. By the time the presenter gets to the inevitable hockey-stick showing a huge ramp up in sales in year 3, followed by the request for growth capital, he or she may well have lost the potential investor who is still trying to answer the question, "How will this help my current situation?"
The investor's current situation will include, for example: tolerance for risk; desired returns; desired public profile; payback interval; social objectives; geographic preferences; prior experience. Once an investor has addressed these "what's in it for me" type questions, he or she will likely be more receptive to listening to the rest of your pitch about what you plan to do with the money.
This principle is featured in a recent book* on influence which is currently being serialized in the Harvard Business Review. Researchers Mark Goulston and John Ullmen note that high-impact influencers are masters in engaging other people in "their there". While their work primarily describes how successful influencers converse one on one, the same principles can be applied to informal small group presentations to potential investors.
... Imagine that you're at one end of a shopping mall — say, the northeast corner, by a cafe. Next, imagine that a friend of yours is at the opposite end of the mall, next to a toy store. And imagine that you're telling that person how to get to where you are.
Now, picture yourself saying, "To get to where I am, start in the northeast corner by a cafe." That doesn't make sense, does it? Because that's where you are, not where the other person is.
Yet that's how we often try to convince others — on our terms, from our assumptions, and based on our experiences. We present our case from our point of view. There's a communication chasm between us and them, but we're acting as if they're already on our side of the gap.
Like in the shopping mall example, we make a mistake by starting with how we see things ("our here"). To help the other person move, we need to start with how they see things ("their there").
For real influence we need to go from our here to their there to engage others in three specific ways:
...Situational Awareness: Show that You Get "It." Show that you understand the opportunities and challenges your conversational counterpart is facing. Offer ideas that work in the person's there....
...Personal Awareness: You Get "Them." Show that you understand his or her strengths, weaknesses, goals, hopes, priorities, needs, limitations, fears, and concerns...
...Solution Awareness: You Get Their Path to Progress. Show people a positive path that enables them to make progress on their own terms. Give them options and alternatives that empower them...
Seeing the world through the eyes of investors is one of the keys to raising capital.
:* Real Influence: Persuade Without Pushing and Gain Without Giving In
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