Today’s guest is Greg Centineo and he has been consulting with several startups. One single project alone was $122 million! He did that by bringing in the right people.
Here are the highlights of my conversation with Greg:
How to bring on investors without giving up control:
- Depends on what you want to give up. There’s an exchange.
- Weigh out how much money you need to bring in.
Investors Invest for Story
Investors invest based on the story behind the company. Who is the company? Why this company? What is the company doing? Ideas drive investors. If they like the idea and it matters in life and others like the idea then they will respond to that.
Investors Invest for Leadership
During interaction with potential investors, the CEO usually blows it during the process because they’re looking for leadership. You’re displaying leadership or non leadership just by spending time with the investors. They’re watching you! So it’s important the person is educated in what they’re doing and understands the pitfalls of raising money and avoids them.
Most Common Mistakes Businesses Make in Persuading Investors:
- Vocabulary
- You need to lose half of your vocabulary. You say all these nice things and you think you have to eliminate or mitigate the idea of risk. This is so wrong right off the bat.
- In fact, the investors want to see the risk. It’s not going to scare them away. They know that without risk, there’s no reward.
- But most startups or CEO’s try to avoid risk and tell the investors nothing but awesome and great. Investors would think you’re lying and that you’re out of your mind.
- You’re not a great leader because you’re unaware of the potential downfalls.
How do you show healthy risk?
Just be honest. Tell your current situation. Then show your strategy in how you can get that company out of it and how your money is going to help you do that. And who else do you have potentially coming in as an investor.
- Failure to keep them informed
- Make investors your top priority of communication. Never keep them in the dark or they can get upset because they don’t know what’s going on and you end up damaging your own investor base.
- Be on top of the updates regardless of the number of your investors. Have a process in place to keep them up to date on a regular basis.
- Their most common excuse for this is they’re too busy and this is another big mistake. Don’t take someone else’s money if you’re not going to talk to them.
- Make sure you maintain contact with them otherwise their minds will wander and they will think the worst because they haven’t heard from you.
- Keep your investors up to speed on a quarterly basis. And because they’re informed, they’ll continue to invest in the project.
Mitigating Skepticism
- Every investor should be skeptic.
What you want is a skeptic investor. But a skeptic without information is ignorant. Ask you investors to take a look at the information and dialogue through it.
- Mitigate their skepticism.
You’re not asking them to invest at that point. You’re simply educating them to eliminate ignorance. You make them knowledgeable. Then they can make an educated decision on what to do about it.
- You also do this for your existing base.
Never cease to educate them on the progress of your project or that person becomes ignorant again. So they go from being confident to being skeptic again. Take care of your investors and you’ll never get overwhelmed.
Chaos creates stability.
- This chaotic concept is the antithesis of micromanaging something. If you’re micromanaging and you’re in control, what you’re doing is going to be very small.
- Be able to create chaos. It’s bigger than you. You can’t control it and when that happens, things happen beyond your reach. And you reach stability.
- Stop micromanaging or eventually you will grow tired. Hire the right people. That’s the big key – right people, right investors. Choose the right people.
Greg’s Major Takeaway:
Whatever you’re doing, know it well. Know everything it is about what you’re doing. Be a consistent student of your product and your project. Everyone is an investor in the world we live in. Everybody is looking to make more money. The world is your audience. So everyone will listen to what you have to say.
Episode Resources:
Connect with Greg on his website www.GregCentineo.com and learn more about the great stuff he’s doing.
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