“A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope via goodfinancetips.com
This week we are choosing topics to research that pertain to raising funds for entrepreneurial pursuits. We’ll be publishing an article in a few weeks about the topic we research, and I chose a pretty traditional form of funding to explore. My topic is “Loans & Lines of Credit (to include SBA guarantees)”.
So far, I’ve learned the Bob Hope comment about banks loaning money only to people who prove they don’t need it is entirely true. Most banks are pretty risk-averse. This explains the popularity of other non-traditional forms of funding for modern entrepreneurs; options like:
- Angel Investors
- & Business Incubators
For entrepreneurs who have collateral to offer and/or extremely great credit, traditional loans and lines of credit can still be a good option but are usually not the only option to pursue. As I conduct more research, I’ll post the whole article on my blog to share.
In the meantime, I’d like to share a couple of thought-provoking pieces about funding.
The first is a quick bit of advice posted on Entrepreneur.com from Amy Williams, CEO at Citizens of Humanity on choosing investors wisely: https://www.entrepreneur.com/video/310046
The second is an interesting article about the story you tell when pitching a start-up to investors. It’s an HBR piece called Startups That Seek to “Disrupt” Get More Funding Than Those That Seek to “Build” by Dana Kanze and Sheena S. Iyengar.
I hope this gives you some food for thought until my next post.
ENT 630: Wk 5-Reactions to It’s a Jungle in There
Every time I’ve ever watched the show, Shark Tank, I’ve actually watched no less than four episodes in a row. Curse you CNBC Prime! Stop luring me in with your savvy investors, entrepreneurial sob stories, and brilliant business ideas. In spite of the manufactured drama, I have learned a lot of helpful tips for entrepreneurs and investors by watching this campy show.
One of the questions the “Sharks” ask entrepreneurs quite frequently is, “are you doing THIS (insert business venture) full time?”. Typically, they ask this question to measure the entrepreneur’s commitment to the company, level of comfort with risk, and generally to see if the person is “all in.” I’ve even seen Kevin O’Leary turn down adorable kids with thriving businesses because school takes up too much of their time and he would rather invest in an entrepreneur, founder, or CEO who can devote all of their waking hours to the business.
This concept of investors only investing in the company if they believe in the entrepreneur behind the company is not unique. We all might roll our eyes at Kevin O’Leary, but Schussler in his book, It’s a Jungle in There, echoes this same exact sentiment in chapter 15: Marketing Yourself to Market Your Product. He says, investors often ask him, “How invested are you in your idea?” (p. 110) Schussler says it’s easy to say “I’m invested 100%”, but when you show them, you are invested by your actions they can’t help but be convinced. Not everyone has to turn their home into a rainforest café prototype or spend millions of dollars mocking up restaurant concepts in a Minneapolis warehouse. There are easy, no-brainer things you can do to show how serious and dedicated you are to your ideas when meeting with investors. Schussler has strong ideas about sending the right message to investors through:
- Physical appearance- wear a suit
- Hand Shakes– know the right balance
- Body Language- act interested; nod your head up and down, etc.
- & Business Cards- convey your concept through the item you leave behind
Don’t forget, not all meetings are scheduled. You might meet an investor at a party, on an airplane, or in the elevator. Always be ready to impress. Make an impression by making the person laugh or tell a story. Stories stick with people and leave an impression. And finally, if you are at a point in your entrepreneurial journey that you can quit your day job, you are approximately 50%* more likely to make a deal on Shark Tank if you are “all-in.”
*success odds calculated purely from my “expertise” in binge-watching Shark Tank. Not statistically valid.