BY VIKASH SANYAL, CEO AT BRAINSTORM GOLF
It’s not easy to get people to part with their money and invest in a new venture, even if the entrepreneurs behind that venture have strong track records.
Investors — even people I’d call “professional investors,” who are always on the lookout for new opportunities — are a tough bunch. Rightly so. Most of them made their money through hard work and by taking calculated risks. And even though they’re all unique with different personalities, they all want the same thing: They want their money to come back to them at a multiple.
So, even though they need to courted, wooed and pursued, more than anything they need to be convinced.
I don’t by any means think of myself as an expert on raising money, but after doing it for several companies, I’ve learned a few important lessons. And I’ve had to re-learn them all over again with Brainstorm Golf and the Happy Putter.
Lesson 1: Raising money takes so much longer than you would expect. The process is brutal. You start putting out feelers to your business contacts, hoping that someone will have positive feedback for you and be willing to introduce you to prospects. You create your business plan and you start sending emails, and more emails, then you follow up with phone calls, and more phone calls. You must be persistent without being desperate or annoying. It’s a sensitive balancing act. When you finally get meetings, you have to be on your game, and in the case of Brainstorm Golf, we had to sell an idea and a vision because we didn’t have a finished product to share. You meet, share your story, answer questions, and you leave the meeting feeling fairly confident. This is where the fun starts.
Lesson 2: Plan on being disappointed. Hot prospects will suddenly go cold. Our first two potential investors seemed very interested at first but then decided they needed more time. (I didn’t have time!) Luckily for us, we met another investor shortly after that — a former professional athlete who really seemed to get our strategy. Not only did this prospect commit to invest between $250K and $500K, he said he felt he could help us finish the entire round through his fellow athlete friends. Great news, right? Yeah, until a few weeks later, when our calls and emails suddenly weren’t being returned. After about a half-dozen emails and another dozen or so voicemails, we got the message (even though we didn’t get the call). To this day, we never heard from this investor letting us know why he had changed his mind. If you’re out there, call me!
Lesson 3: Don’t ever stop meeting with prospects even if you feel you’ve found the right investors. We lost two months because we took someone’s word and thought we had found our investor team.
Lesson 4: Stay resilient; stay hopeful. The disappointments aside, there are investors who do what they say, send their checks as promised, and become key members of your team. You can never tell where you are going to find them, but if you keep looking, you will find them. You must be confident even when inside you’re scared to death. You must realize and plan for the fact that even though you need the money today, you’re not going to get it for a while.
Lesson 5: Too many entrepreneurs get caught up in dilution. This isn’t to say that you shouldn’t be careful as you sell shares in your company, but rather, focus more on growing the overall size of the pie rather than how big your slice is. I’ll never forget the advice Mr. Callaway gave me when I asked him about dilution, “It’s better to own one percent of Disney than 100 percent of Gatorland.”