In my notes on this blog, I will return again and again to the most important aspect of raising capital for your business: credibility. If Steve Jobs were to leave Apple and launch a new firm, he could probably raise funds by simply expressing his ideas in a single meeting. He can do this because he has proven that he knows how to not only create new products but to create new products that capture the imagination of the public and which can generate large profits.

If your are a so-called “serial entrepreneur” you probably are not reading this blog because you have the background and credibility to meet and impress investors, you know what your business needs to achieve in order to be an attractive investment candidate and you probably have a group of investors who is waiting to hear your next pitch.

Chances are that you are reading this note because you are not sure how to raise funds or you have approached investors in the past without success. It all boils down to this: if you have credibility you will be able to raise funds and if you don’t have credibility you won’t. Obviously, I’m talking about a particular kind of credibility as it relates to launching a business and raising money.

The goal of this note is to help you understand and self-assess how you are likely to be perceived in the eyes of investors. Other notes will focus on all the things you can do to increase your credibility. But, it is important to understand where you stand before we start so that you can emphasize your strengths and work on any weaknesses. In order to succeed in building your company and raising funds you need to have a realistic picture of your personal credibility and your company credibility at each stage in its evolution.

How credible are you?
All types of people successfully launch businesses: men and women of every race, young and old, technologists and managers, experienced and inexperienced. The important thing to understand is that it is an investor’s job to figure out who you “really are” so it is vital that you present who you are, not who you think they want to meet. It is easy enough to add people and skills to an organization but it is very difficult to invest in and work with a person who thinks he has skills or experience that he does not. The fastest way to blow an investor meeting is to project an image of yourself that the investor does not believe.

Ask yourself the following questions:

What is your natural “role” in the company? While you may now carry every title from CEO to Janitor, there is some aspect of you that has led you to create your technology, service and company. Perhaps you are a technical person that has discovered a new and better product, perhaps you are an industry executive leaving your company to compete with a better approach, or you may be a creative visionary who has come up with a way to meet some important consumer need. Perhaps at the moment, you are all three, but if your company is to be successful you will have to start making choices very soon because you can’t do everything. What do you want to focus on? What are you really good at? What title or role will people feel is most appropriate for you in a larger company? It is important that you understand your “core” value proposition as part of the company you are presenting.

What is your level of experience? Because your job is to convince investors that you know what you are talking about, you need to be able to argue that you (or others around you) have the requisite experience to speak with authority about what you are planning to do. When we talk about this with entrepreneurs it is often a tricky topic to explain. It is true that if you have a new business or product idea, you certainly won’t have any experience building a company with this business idea. However, you need to have deep expertise in the areas that make your claims unique and better. You need to be able to complete the sentence… “The reason why I know what I’m talking about is…”

What are you good at? Are you a dynamic leader / cheerleader? Are you an extremely effective at solving analytical problems? Have you managed people, and if so, did you like it and were you good at it? It is important that you think about these things sooner rather than later. As I said earlier, every kind of person can raise money for a business, but the ones that do tend to be self-aware and, as a result, tend to give others confidence that they will be a team player rather than try to be something they are not.

In summary, it is important that you spend time thinking about your “core” strengths and what you bring to the table for a number of reasons: so that you know what other talents are needed, so that you prepare for your evolution within the company as it grows and so that you can demonstrate that you understand these things to investors who may be interested in investing. Regardless of the title you carry into an investor meeting, by the time you leave the investor has “put you in a box”. It is an investor’s job to quickly draw conclusions such as:

• “This is a great visionary leader but he’s going to need better technical people on his team”
• “This is a smart technologist but ultimately he will not be the right person to be CEO”
• “This person is very smart but needs help figuring out the financial model for his business”.

Try to understand the stereotype that you will project given your experience and talents and either embrace it (by adding other skills and experiences to your team or by acknowledging that you will need them) or by adjusting your presentation to correct what may be faulty assumptions about you.

After originally posting this blog someone mentioned to me that Ben Kuo, SoCalTech, posted a note about raising money and entrepreneur reputation. Ben explains why it is important to stay positive about the experience and about the investors you meet along the way (it’s a small community).

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