Are You Asking for My Advice or My Money?
My profile includes the description “recovering startup investor” for a reason. It also includes “Frappuccino addict,” but that’s a topic for another post.
I was prompted to adjust my investor status to help clarify my position when asked to look at prospective business plans. Far too often a request for advice was little more than a thinly veiled pretext for seeking (even expecting) investment.
Even worse, under the guise of seeking “help” few of these entrepreneurs took the time to “sit in my chair” and address the “what’s in it for me?” cornerstone question of an investment pitch. Instead, consumed by the brilliance of their idea, they saw money simply as an obstacle on the path to the fulfillment of their dream.
Their assumption is that my goal should be to help them fulfill their dream, and they're half right. I would like to help you achieve your dream and build something of value – assuming we can agree that what you want to create has value, and that's precisely why I like talking to entrepreneurs.
Where they go wrong is that the foundation of any investment is the return, so any startup that requires investment must make the financial reward a fundamental part of the business plan. We often find that entrepreneurs focus almost exclusively on building the business and not on incenting and rewarding investors.
So, if you’re looking for advice, I’m happy to help, and that includes helping you learn how to ask for money – just don’t expect it to be mine.