Asking for Money

Nobody I've ever met likes asking for money.  Whether it is a politician seeking election, a fundraiser working to cure cancer, a college kid trying to hit up mom and dad, an employee seeking a raise, or an entrepreneur trying to raise capital, everyone seems to hate the process.  Yet it is a necessary thing for most people at some point in their lives.

Interestingly, some overcome this problem better than others.  Politicians who win clearly do what it takes to raise campaign cash.  The ones I have worked for in the past haven't liked it -- and some came up with every possible excuse to avoid it -- but at the end of the day they did enough to generate the money they needed to run for office and win.

And kids generally still have little enough shame that getting cash from their parents isn't that challenging.  Successful entrepreneurs who have businesses that can't be bootstrapped similarly find a way to get it done if they are going to succeed.

Unfortunately, I frequently find that too many organized fundraising efforts lack good money asking skills.  I have contributed to a number of charities, non-profits, schools, and campaigns in the past, and I have found that more often than not they don't do a good job of working to raise more.

For instance, in a recent election cycle I was never asked by a candidate for office to contribute to his campaign.  I had contributed to this individual in the past, but never heard anything.  Until he lost.  And then I received the autoprinted campaign holiday card.  So apparently my name was still on the house list, but I can't explain this glaring oversight.

Non-profits typically have been much worse.  There are two that I give to that send me about one contribution request by mail every week.  Yet there are others that I give to that rarely if ever follow up to ask for more.  And there are a number with which I have a personal relationship either because of past giving or other connections with key individuals that fail to ever ask for any additional gifts.  That's simply inexplicable to me. 

It's not that I want to be hit up all the time -- I don't.  But it would seem to me that even a once a year ask from some of these groups would be a wise move.  And if they're overlooking the opportunity they have with me, no doubt there are countless others on their lists that fall into the same category.  Imagine how much more good these organizations could do if they were more effective at fundraising.

And entrepreneurs aren't completely off the hook here.  I deal with quite a few who are seeking angel investments in their startups.  They're great about getting the first meeting -- most are pretty dogged about that.  But most have a hard time figuring out how to follow up.  Some do so very aggressively, but most seem to take a very passive approach. 

One could chalk that up to belief in the soft sell.  Or perhaps their belief is that any investor who is really interested wouldn't let a good idea just slip through the cracks.  But if I were in their position, I would want to have a better sense as to where my funding request stood.  Just a periodic check in email would be smart to see if a final decision has been made so that the limited resources of a startup can be better directed.  And I can't speak for most angel investors, but at least in my own case the pace of my "first job" can often lead me to leave business plans on the back burner.  It's not that I'm trying to ignore them or not interested, it's just there are only so many hours in the day.

Ultimately, the individuals and organizations that achieve the best balance between aggressiveness and passivity will do the best at raising whatever money they are asking for.

Technorati tags: asking for money, fundraising, angel investing, vc, venture capital, startup capital

Comments

[Rod]

Entrepreneurs looking for capital are unfortunately forced to play by the "Rule of Gold"--He who has the gold, rules--Unfortunately, that means waiting for schedules to open, waiting on decision makers,waiting for someone to take an interest in your project...etc.

It is no wonder that following up with an angel investor can be a little tricky. You don't want to be pushy or too persistent, but you also do need to ping your prospects from time to time to keep the ball rolling. I hate to admit that I have unintentionally dragged my feet on more than one occasion only to be prodded into action by a polite follow up from management. My advice would be to demonstrate tact, patience, and enough diligence to show an investor you have the ability to chew gum, juggle, herd cats, and successfully operate your business while dancing for investors all at the same time. Look at like an opportunity. This is your time to shine!!

[Karen Rands]

I addressed this topic in my blog (http://entrepreneurblogspace.com/?p=11) and the answer is quite simple. You can DIY Do it Yourself and not pay anything, or you can hire professionals. When companies are raising $10M they hire a broker dealer and pay retainers and a big percentage of the money. They do that because they need the expertise and access to capital. Likewise a company that is raising their first outside round (after friends and family and balance sheet money) and is not experienced at it and does not have access to hundreds of investors needs to plan on spending money for legal securities advise, possibly hire someone to enhance their business plan, pay to attend events, hire a coach to help them with their presentation, and pay for investor relations services. All with the intent to make their capital raise effort more efficient. There is a new event that is brewing in the Southeast that will work with most companies' budgets that are actively raising capital and is a flat fee with no hidden charges. It combines the best of both worlds with an expo for displaying and pitching the investors that circulate and a formal venture type deal flow meeting with selected companies being able to pitch a full 9 minutes to a captive audience of 100 or more private angel investors and venture capitalists. Also there is education to help those that are learning the language and process of capital raising learn more. This event is the Southeast Private Equity Conference (www.sePrivateEquity.org) and there is a podcast on the event that explains a lot at Blog Talk Radio: (www.blogtalkradio.com/Karen-rands). The event is April 29th, at the 103 West club on West Paces Ferry Rd here in Atlanta. Deadlines for business plans submission is the end of March.