Over the last week I’ve bounded across Silicon Valley with an organization called SV Links. We connected Latin American business leaders and entrepreneurs with investors and businesses of tech in the Silicon Valley. Google lunches and gazillionaire VC cocktail mixers occupied my diet regime. (Note to self: exercise while you’re in Chicago this week.)
During the startup presentations and meetings with Venture Capital (VC) firms I learned something valuable from the Morrison Foerster legal group. The MoFos (yes, they call themselves this) enumerated the top four reasons why an investor would choose to invest in a company:
1. Because they know you
Friends, family and fools (who love you) all want to see you succeed. Your company will seek these people first for investment.
2. Because they don’t want to miss out
Let’s be honest, the thought of building a company and striking it rich can be sexy. Yes, the 21st-century California gold rush has begun. And wealthy prospectors are rootin’-and-a-tootin’ to hop on the wagontrain to IPO-ville. Just like the 49ers (the gold miners, not the NFL team), people want to invest their money and time to get some gold nugget$ in the long haul. Your business might be that gold nugget.
3. Because they need to invest
Some people simply have the job title of “investor.” VC firms do two functions: raise money and invest. They raise money so that they can invest in promising ventures and make a sizable return. So, investors do their job by investing in your company.
4. Because they are investors who truly evaluate your business model
In the end, people have feelings. If they truly value your business on every level: rational, financial and, most importantly, emotional, then they’ll take out their pocketbooks for sure.
This new gold rush can get wild, but if you know where to sift for funds, then you might have a chance to gallup off into the golden horizon with your company.
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[…] in the Silicon Valley. 2 For more tips on how to raise money from investors, check out my posts on The Top 4 Reasons People Choose to Invest in Companies and 8 Tips for Venture Fundraising from my mentor and fourth-generation venture capitalist Adam […]