Apr 10
25
A Method For Fund Raising – Shibumi
I meet a lot of people who want to achieve things that need some sort of outside involvement.
Because of my past in the music industry, I meet people who want to get signed to major labels relatively often. Because I have been involved in raising money for businesses, I seem to bump into people pretty regularly who want to get funding for their business idea. And because I am involved in consulting on commercialization of IP, I also seem to find myself hearing about ideas of all kinds…
One of the most frustrating things is perhaps to be doing a pitch to someone and coming to the conclusion without anyone saying anything, that the answer to the big question – “Will you invest dollars x?” – is going to be “No”, before you even get there. You are going through the slides. The people in the room are asking questions. And at some point you intuit that the atmosphere in the room has changed, and it has moved from “mildly interested” to “negative”. And then there are those fabulous occasions when the mood is so totally “yes” that you can get recklessly into asking for more than you need; you can hold the line at the price per share that you are looking for; and you just know that you are on the way to a close.
Why the difference?
I think that the first time that I truly understood how this kind of thing works was when I was in Japan and trying to close a deal with a very big semi conductor company. The deal wasn't big, but closing it would mean that I had one of the best brands in the world as a reference customer.
My contact at the company, an engineer, had told me that to move to the next stage of the relationship would require that I had a meeting, and approval, from the Chairman of the company. He had arranged a meeting. He also asked me, no pleaded, that whatever I said to the Chairman would not negatively impact him. Apparently his career was at stake on this deal.
I assured my engineer friend that he could rely on me to not embarrass him in any way.
We sat in the large meeting room – all the engineers from the division, several of my people and our representative in Japan, who also acted as translator. The meeting proceeded as anticipated, but clearly could not be resolved without the imprimatur of the Chairman.
Eventually he arrived. We were introduced. And then we went into a tiny room off the main meeting room for our private meeting. It was just big enough to fit the furnishings of two chairs and a small table. The Chairman asked me to sit down, and then said to me, “So Gilbey-san, what do you think about technology?”
I thought, “My God, that is a big question. Where do you begin or end with it?”
So I channeled within to some inner place and said,” Humanity should not serve technology. I think that technology should serve humanity”, thinking, I hope that this is the sort of conversation that the Chairman wants to have….
The Chairman got up from his seat. He reached over the table, stretching out his hand to shake mine, and said: “Very good, Gilbey-san. We can do business.”
He then escorted me out of the room. And the deal was done.
It was, I think now, an experience of shibumi. According to Wikipedia: “Essentially, the aesthetic ideal of shibumi seeks out events,
performances, people or objects that are beautiful in a direct and
simple way, without being flashy”
It is that insight into the truth of balance.
Now that is what is needed in order to raise money too.
Most people think that their ideas are great and that is a good place to start. No point in trying to raise money for a bad idea. The problem is that most people don't realize that this is just the beginning. What needs to happen next is to find that balance between a good idea and all the things that the good idea needs to satisfy in order to be turned into an idea whose time has come.
Every idea has to have a customer.
Investors are pretty much the first customer. What is the value proposition that is going to sufficiently engage someone to cause them to make the decision to purchase the shares that you are offering? First they need to feel connected to what you are doing. They need to be able to understand what it is that you are trying to achieve. If the language is filled with jargon, they might feel that they are just not smart enough for you. That is a bad thing, so you have to simplify what you are saying so that it communicates.
Then you need to be able to show that you have real customers who have a problem that you can solve. That means that you have to be able to demonstrate that you have actually talked to your prospective customers and asked them what they want. Its not good enough to just talk about the reports that you have read. You need to be able to map what the solutions are that they are employing now, and how much money they are spending and how rusted on their solutions are. You need to be able to show that you have seriously identified where the low hanging fruit is.
If you business model requires huge amounts of traffic to a web site you have to be able to demonstrate pretty convincingly what is going to drive people to your site. Not just theory, but practical demonstrations.
You need a prototype. People can read about something and say that they get it, but actually touching and feeling something – that is a whole different thing. Involvement really aids understanding.
There is plenty more that you have to do…
…But there is one thing that is really, really important.
You have to raise money in order to raise money. That means you have to prove that you can do it, in order to be able to do it. A lot of people think that you just start by hitting VC's.
VC's are really sophisticated investors. They see everything. They know everything. They know (generally) a lot more than you about what you think you already know a lot about. Starting with these guys as your target for fund raising is like trying to start at sport and first trying to get picked for the Olympics. It really pays to start small. And you need to be able to tell a VC that you have raised money from friends and family to help boot strap the business. The respect that.
So the bottom line for fund raising is that underpinning your efforts you need shibumi – a fine balance of the astringent taste of a persimmon and the ability to remain perfectly calm and detached and centred on what the business really needs and not just what your ego would like for it…
(photo below – from Dale Hoopingarner's website)
