__Make yourself investable.
“If I ask you to invest $1m in the tourism sector what would you do?” Some of you will remember this comment from a post a few months ago. There is a “language” by which you reply to such a question, which will suggest to me if I’m dealing with an entrepreneur. How you answer actually “locates” you in terms of the risk you would pose to my money.
One of you commented back something like this: “I will be back, and I promise, you won’t say IF I give you $1M, you shall say I WILL give you $3M. I accept this as a challenge!” I remarked this was actually the best answer possible, but the only thing one must avoid is the use of the word ‘give’. This is not a word investors like to hear!
Never confuse an investor with your uncle, or a charity organization wishing to do you a favor. Most people looking for investors scare them off because of how they speak.
In the past I’ve written about “the language of business and the language of investment.” Every game has its “language,” meaning that there are things you can say which tell people you know about the game, or likewise which show that you are a novice. For instance, if a cricket fan goes to a football match for the first time, and sits with knowledgeable fans, they will laugh at him if he starts to use expressions like “that was a great wicket!” Or if he calls the wicketkeeper a goalkeeper!
Similarly, if you go to a potential investor and ask him or her to “give” you money, they will be very wary about you. Or if you ask them for “help,” chances are they will not invest.
First of all, my money as an investor is not a donation or a gift. It remains at all times my money. When discussing with an investor, they want to first establish the risk to the money.
Another answer to that question was they would first “give” 5% of my $1m to the community! That would set off an alarm bell!
“I’m quite capable of ‘giving’ my own money, and I don’t need an intermediary,” the investor would tell you. Many people commented about the beauty of their area, and so forth…
No investor is interested in that kind of information because they can get it from other more accurate sources. I don’t want to hurt your feelings here but remember my words:
#1. Never approach an investor like a long lost uncle who owes you something because your father sent him to school.
#2. Don’t confuse investors with donors, who want to do something to help young people. A donor is a donor, and an investor is an investor.
#3. Don’t look for sympathy from investors, leave it for the donors.
#4. There is no one out there who will ever “give” you $1m. Certainly not if you are a first time entrepreneur. It would have to be quite an extraordinary innovation that you have developed. Being able to show that you are realistic and reasonable is very important.
#5. Even on Shark Tank, you rarely ever see investments that went to that kind of level. It is a lot of money! How you respond to such an opportunity must reflect your appreciation of the fact that it is a lot of money. The document you would have to put together for that kind of money will be very exhaustive.
#6. 99% of the people who say they need capital, fail to impress potential investors or even bankers, simply because they speak with the language that suggests they will lose the money!
If I say to you as an investor, that I want to invest $1m, don’t meander around telling me fables from your community.
-Show me you are smart and innovative.
-Show me that you have a business plan.
-Show me that you have the #3Ps, or at best appreciate them.
-Make yourself investable!
If I ask you to invest on my behalf, you are both a steward and a manager. The first question you want to ask me is: “What kind of return do you expect?”
Which means you must “know” already what is a typical return! I need you to learn the “language of the game.” No one is born knowing this language.
If you are on this platform for entrepreneurs and you prefer a sports channel to something like CNBC Africa or Bloomberg, then you are not in the league of people who will ever get an investment of $1m or more!
There is a passion which comes with someone who gets that kind of investment. It’s the passion of “soccer fan for his team”.
So some of you have been on this platform for years. Do you think you are now “investable”? How do you know? Give me a one paragraph pitch (and remember, share no business secrets). Shhhh.