The first thing you must understand about fundraising is that it is not just about asking for money, but rather, it is about winning investors' trust.
Building trust takes time and effort. It is not achieved quickly or easily. It is built through consistent actions and behaviours that demonstrate reliability, honesty, and integrity. ‘Sure, but everything takes time and effort’, you say. Indeed, any worthwhile undertaking does. But fundraising is quite a unique endeavour. Money is one of the most difficult things to ask of people. Harder still to extract. For most investors, cash is the last thing they will part with, if at all. It is their ‘precious’, to borrow the expression from the Lord of the Rings.
Being able to raise significant amounts of money from investors is often viewed as a hallmark of exceptional fundraising skills and talent. That is why individuals who can achieve this feat are highly respected.
Raising significant capital from investors on a consistent basis is a rare talent, and it requires a blend of art and science.
Below, you’ll find some core skills the best fundraisers in the world invariably possess. Pay close attention to them and make them a part of your everyday personal development.
The first one begins well before a fundraiser even reaches out to potential investors.
Assessing the offering from multiple angles
You can have a powerful rolodex and have a Shakespearean command of the English language but if the opportunity you’re pitching isn’t compelling you’ll struggle, at best.
An experienced fundraiser judges an investment opportunity from different angles. The deal at hand must present a truly attractive opportunity. Here, the fundraiser will consider the forecast returns, risk levels, ability of the management / team to execute a plan, the financials and more. Equally, however, the fundraiser will also need to consider the opportunity from an investor’s standpoint and determine whether there will be potential demand for such opportunities. Do they have interest in the sector, geography, return profile, etc.
There are plenty of founders and companies working on breakthrough technologies or products. However, if there is little investor demand for their propositions then raising capital will be challenging.
Knowing your investors
A fundraiser must know and understand investors well in order to persuade them to support their cause, i.e. to invest. That comes through regular study and interaction. Studying their interests, values, and motivations. Knowing what makes them tick, not only as professional investors but also as individuals, on a personal basis. By doing so, a fundraiser can craft a message that will strongly resonate with investors.
Knowledge of investors happens at both the individual level – about the investment officer – and organisation level – about the investment entity. Knowing what the person you are liaising with wants and how that fits within the organisations they work for.
Relationships
Time and history often determine the strength of a relationship between two people. Having said that, without having genuine interest in the other party and a meaningful connection between you, the relationship will be hollow.
You can know an investor for years but if, throughout that time, your touchpoints were superficial and self-motivated then don’t be surprised if another person comes along and builds a meaningful relationship, and a much stronger bond, in a fraction of the time.
Showing genuine interest in other people and their needs makes a huge impact. Build trust and respect. And always view relationships as long term game. Do not be dissuaded because of short-term hopes and ambitions. The most successful fundraisers in the world play the long-term game.
Persuasion
This is closely tied to previous section. The more you know about your audience, including their motivations, the more persuasive you can be. This knowledge will help you tailor your fundraising message more effectively.
It is very important to take the time to understand investors’ needs, goals and preferences and approach discussions with their requirements in mind.
Do not be the fundraiser who puts the opportunity before all else.
Showing empathy and exercising active listening will strengthen your skills of persuasion.
Storytelling
Storytelling is paramount to fundraising. A compelling story can capture an investor’s attention and motivate them to invest.
A well-crafted story can connect investors emotionally to the opportunity and inspire them to take action.
Therefore, when fundraising do not make your pitch just a matter of facts, figures and charts. Make it a story, a tale of passion and determination, of struggles and triumphs, and of obstacles surmounted. You want to create an emotional connection with your investors.
You want them to remember the opportunity you’re fundraising for and talk about it in the days that follow your pitch.
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In conclusion, fundraising is an art that requires objective assessment of investment opportunities; deep understanding of investor psychology; commitment to building meaningful relationships based on trust and integrity; the capacity to put yourself in their shoes; and the ability to weave moving stories into your pitch. With these core skills, you will consistently raise capital and become a formidable fundraiser.
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Fundraising is an art that can be developed and mastered. Learn more with the definitive guide to fundraising: The Fundraising Guide (More Than Just Money: How To Fundraise Successfully).