Venture Capitalists and Reverse Psychology

At the New York Venture Summit last week a VC on one of the panels brought up an old saying that I think is worth repeating here:

“If you ask for money, you may get advice. If you ask for advice, you may get money.”

So many times entrepreneurs go into a meeting with blinders on and a very narrow focus — $$$$$. Gotta get it, gotta get it now.

In every instance there’s a 360-degree angle that others are looking at and using to evaluate your pitch or your existing business before they “buy” (and make no mistake about it, if a VC is giving you money, they are “buying” into two things…an idea and you, the founder). If you don’t take that into consideration, you could be wasting your time and blowing opportunities that may not be available again.

One of the things VCs and Angels want to see in you and your company is, who’s interested in you and following you? Have you built a critical mass or a tribe with your company? Lone Rangers are not enough. You need a string of Tontos riding with you these days. This kind of following is a validation of your company, product, of you as an entrepreneur. And by followers, I don’t mean your 20 closest friends and family. I mean outsiders who really like your idea. Now if a VC becomes one of your followers, this may ultimately be better than getting some $$$. Why? Because they will help promote you. Others will see that they are part of your following and take more notice. Money, or solutions, will follow.

Take, for instance, the story of a start-up up that needed $5k for printing their promotion materials. Their VC found them a source that ultimately gave them $25K worth of printing for free. So, if you’re looking for VC funding be open to VC coaching and advisory support, too, and forget powering through to the “ask”…

Sandra Holtzman teaches CEO 035: Licensing.

5 thoughts on “Venture Capitalists and Reverse Psychology”

  1. Good advice to take into consideration. The excitement of VCs like Kickstarter are helping innovative small business owners who are making viable business start ups NOW. If you have a great idea, don’t let the down economy keep you down.

  2. As a former finance professional at a major investment bank, we always looked at who invested in a company when considering that company as a potential client of the bank. The major investors in a company validate the management, lend credibility to the company and confidence to invest further. Yes, we would like to join that club and become associated with the company’s success! Those original investors probably got involved in the primary round of financing (after the investment by the founders) as individual investors or venture capital types. What they were looking for initially was a strong management team, unique product and sales potential in a growing market.

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