Why the f*ck can't I raise investment?

Phil McSweeney MA MBA

Why the f*ck indeed, founders, because most of you can’t!

Here’s the simplest answer I can give you - investors would rather invest in something or someone else. I know, I’m an angel. Our problem - we have too much choice and, if you don’t want me to sugar-coat it, you haven’t made the cut.

October 6th 2022 – a memorable day for me. My book AngelThink was published. I tell founders if they want to fundraise they have to get inside angel’s heads, think like angels do, second-guess what we want. The book gives founders that competitive edge.

When you ask investors for the reasons why they might decline your ‘incredible opportunity’ the answers you get are often not a lot of help – ‘I’m not looking for an opportunity at the moment (insert reason here)’ or ‘I couldn’t make the story stack up. I was expecting more / less (insert reason here)’. You can probably guess why we might not have the time or inclination to ‘coach’ you to a better presentation.

AngelThink is still available, still highly acclaimed, but I’m turning my thoughts to a new book – working title “Why the f*ck can't I raise investment?” as titled here. Market research says yes, go for it.

So, let me tell you what I’m trying here - a trial run of a few ideas that’ll most probably make the book.

Let’s leave aside timing, the state of the economy, politics, human quirks, (remember PESTLE factors?) and anything else you have no control over and concentrate on what you can control – you and your idea. From working with hundreds of founders over many years (mentor, coach, adviser, investor) here are five main things that founders don’t always seem to ‘get’ - and what I’ll unpick in detail in the book in due course. All important. No particular order.

-????????? You don’t really understand what an investor is looking for in an opportunity. You might think you know – because almost everyone starts a pitch the same way. Here’s a big customer problem and here’s a big solution. It’ll change this in the world. And then you show me a hockey-stick graph of how much revenue it’ll be making to year 5. And we both know it’s a delusion. What I really want is to be persuaded that you can do it, you are the guy or gal that can pull it off. I want to be confident that you can execute, scale, raise again and again, stay standing, get people to follow you, stay sane, and exit. Let me repeat exit – because investment has two parts to it – money going in and more money coming back out. Show me you get that.

?-????????? You haven’t mastered the art of telling a compelling story. To be compelling you have to grip investors emotionally as well as with logic. You have to build the love of you. Investors have to love you – more than any other idea they know about – to invest in you. You have to be skilled at choosing the story, choosing the emotional notes to play, and composing a business narrative. Investors will chime with a powerful origin story (sharing where your passion came from), an engrossing vision (sharing what you are going to change in the world for a target group, tribe, cult, etc.), and an ability to perform. Learn how to hug.

?-????????? You don’t look like a winner. You have to know what has to be at the heart of your offer that will give you competitive advantage, that will make you look like the winner of the contest you’re in? Do you know that? It will always include your authority in the space you’re in, your command of it. It could include many other things too, your IP, insider knowledge, superior team, prior successful exit. It’s so easy to discount people – except the exceptional.

?-????????? You don’t have enough appreciation of why you might fail (as the majority do) and how you are going to cover that risk. At the top of most lists of reasons for failing is building a product that not enough people want. You’re gambling with years of your life and you’re asking investors to gamble with hundreds of thousands of pounds. I see some pretty flimsy attempts to evidence a market exists. Wildly inflated market sizing exercises with inadequate evidence. Lack of ownership of a product is not proof of need. Apathy and inertia are the greatest competitors you’ll face in trying to sell anything. Show me how big an obtainable market is, how you’ll reach these customers (a credible go-to-market strategy) and why they’ll buy.

?-????????? Lastly, you probably haven’t considered investor psychology – the tactics you can use, entirely ethically, that positively influence investor’s feelings and decision-making about you and make them talk themselves into saying ‘YES’. I’m not talking about ‘in your face’ FOMO or scarcity tactics – investors are not giddy-kneed teenagers. You have to be more subtle. I’m talking about rapport-building, using reciprocity, offering partnership. I’m talking about balancing honesty with ambition. I’m talking about de-risking enough to help them find a balance between loss-aversion and thrill-seeking. I’m talking about being your authentic self and letting investors see what they’re getting. I’m talking about understanding and playing biases – like showing certainty not hope.

?For many founders I’m talking about getting beyond the idea and exploring personal growth, the ‘inner work’ you suspect you need to do to look like a leader and make investors choose you. In my experience, most investors make decisions about founders over ideas. More often than not, what helps you raise is usually when you stop talking and let them talk themselves into or out of an investment in you – because they have enough confidence in you. You have to be the reason they say ‘YES’ – you are the prize. Learn how to become it.

An abridged version of this article appeared on Maddyness in January 2024.

AngelThink is available on Amazon as a paperback and ebook.

My best wishes in your fundraise!