How I Became A Marketing VC And What You Need To Know To Close The DealWritten by Kyle S. Reyes
How to get money from a VC - what you need to know about venture capitalists.
There are a couple of ways you can cook a lobster. You can put it in a pot of boiling water tail first and listen to it shriek.
You can put it into a pot of water and bring it to a boil, ensuring the lobster never knew what hit it until it was too late.
Or you could be like my Chef Stefan, who chooses to slice the lobster in half while it’s alive and THEN boil it.
Turns out that when it came to being a Venture Capitalist, I was like the lobster slowly being brought to a boil. I didn’t realize what was happening until I was already in it.
First – a simplified version of just what a VC is for those new to the world of business.
By definition, according to Investopedia.com a Venture Capitalist is: an investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to equities markets. Venture capitalists are willing to invest in such companies because they can earn a massive return on their investments if these companies are a success.
Venture capitalists also experience major losses when their picks fail, but these investors are typically wealthy enough that they can afford to take the risks associated with funding young, unproven companies that appear to have a great idea and a great management team.
So how did a 30-something-year-old entrepreneur end up in this world? Two words: marketing capital.
About a year ago, I was having lunch with a client who also happens to be a massively successful entrepreneur himself. He’s got a $15 million dollar fund that he uses to invest in strategic companies as a VC. We were discussing some of the start-ups that we’ve both invested in and it turned out that we were both in high-level talks with the same company out of Maine. Small world.
He wanted to know if I was going to go in…and to what extent.
When I told him we were discussing an equity stake for an investment on my part of just over $100K in services, it was like a light bulb went off for him.
“You’re a VC,” he told me.
“No, I’m definitely not,” I said. “I mainly invest my staff and expertise – not millions of dollars out of pocket.”
“It doesn’t matter,” he said. “Conceptually, we’re one and the same.”
That week began the conversations about a strategic partnership between us and several other “sharks” of sorts. The investments we make aren’t all straight up cash. And that’s what has made the fund so much more valuable, according to people who know much more than I about this stuff.
Think about it like this. Look at the show “Shark Tank”. How many startups come on the show not just looking for an investment, but also looking for expertise? They’re looking for help with distribution, production, marketing, public relations and more.
So what’s some inside advice on how to close the deal with a “shark” and get the investment? Keep reading and I’ll share the marketing side of things.
- Know Your Unique Selling Proposition- I don’t care that you have competition. I want to know that YOU know you have competition. I want to know who that competition is and how you’re going to destroy them. I need you to acknowledge that they’re 50 times the size of you and show me how you’re going to out maneuver them. I need you to be able to stand in front of me for four hours and be ripped to shreds while I get to the heart of what your business identity is and who YOU are as an individual. Because if you can survive that, you’re well on your way.
- Be A Leader- A big, big part of getting the investment is going to be showing my partners and I that you’re a leader. I need you to be filled with energy and charisma. I need you to bring us through your story, inspire us and excite us. We need to be as pumped as you are…because it helps us to believe in you and believe in the idea that you’ll be able to lead your team through anything and everything.
- Take The Risk- I can smell a BS artist a million miles away. Most of us can. So if you come to the table and expect us to have more to lose than you do – forget it. Be 150% in. Tell me about your failures – not just your accomplishments. It will strengthen my belief that you can adapt.
- Put Me In The Shoes Of Your Customer- Don’t just show me charts and numbers. Help me to be a customer. Help me understand the problem you solve with your product or service and how you can convince me to buy it. Justify the price to me. Teach me how you’re going to turn me into a brand ambassador and get me – as a customer – to want to tell EVERYONE about this.
- The Solid Team- I want to – no, I NEED to – know everything about everyone on your team. I want to know about their passion. I want to know about their weaknesses. I want to know about your management team’s family situations. Talk to me about faith. Kids. Your favorite restaurant and that of everyone on your staff. I need to know what drives each and every one of you.
- Are You Ready To Explode?- We aren’t going into this half-ass. Neither can you. You need to have a plan for rapid – RAPID – expansion and scalability. You need to have the drive to work 20-hour days for the next two years. You need to have – or have a plan for – infrastructure to take it to the next level.
- Don’t Wear A Suit- If you’re not a suit guy/gal. You’ll be nervous. You’ll be uncomfortable. You won’t be YOU. I need to know the real YOU if we’re going to invest millions into you.
- Know That We’re Followers As Well As Leaders- We lead each of our respective markets. That’s how we’ve gotten to be VC’s. But we also follow. We follow the eyeballs so we know where the markets are headed. We’re those people who were watching Snapchat and Uber before you’d ever heard of them. We expect you to follow and lead the market as well.
- Prepare To Debate- This won’t be a walk in the park. This won’t be easy. This won’t be fun. You’ll sweat up a storm. You’ll feel nervous. You may want to throw up halfway through. We’re going to challenge EVERYTHING and we expect you to debate with us. And win. After all, your entire future is on the line.
- Ask Us For Our Investment- You’d be shocked at how many people make it through to a pitch to us…CRUSH the pitch…and then never ask for the sale. Tell us how much – and what – you need and what you’ll use the investment for. Let us know what our return is going to be and how quickly we’ll see it. We’re ok with you planning on being bought out – just make sure we know your exit strategy.
Bottom line? Know your product and know yourself. Then go get it.
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Kyle Reyes is President and CEO of The Silent Partner Marketing. He's also an acclaimed Keynote Speaker on entrepreneurship, leadership, marketing and social media. You can find him on Facebook, Twitter, Instagram and on Snapchat @dasilentpartner.