December 9th, 2019 | By: Wil Schroter | Tags: Funding
There it is:
That super awkward moment when we're about to turn the conversation with our rich Uncle Mortimer from "Well it's been great catching up on my new startup" to "Hey would you mind investing some of your hard-earned money into this venture?"
So how do we ask friends and family for money without it getting totally weird?
Is there a way to "pitch" that doesn't leave both sides feeling uncomfortable every Thanksgiving?
There are lots of different ways to ask for money, and most of them are really awful.
What we want to do is position the ask in a way that makes it clear we're asking for money, but also clear that it's not more important than the relationship.
Before we ask for money, we have to make sure there's some level of interest in the venture at all.
We can do this by asking if the person we're talking to would have any interest whatsoever being involved at any level whatsoever.
We can begin by getting the sense for whether they want to be an Advisor, which could lead to an investor later. We're looking for some indication that they are willing to spend time and resources toward this venture.
If they don't seem to be leaning in at any point, asking for a bunch of money is definitely not the right closing move!
Good ol' Uncle Mortimer is going to be far more freaked out if we try to box him in with our ask.
If we say "Will you please invest $25K in our startup?" then we're forcing an immediate, "yes" or "no" answer. That's not a problem if the answer is a resounding "YES!" But let's face it, it's probably not that.
That's where our challenge comes in.
Instead, let's give him an out. Let's ask "We're raising $25K for our startup. We'd love to see if you or anyone you know might be interested in getting involved at some point."
In that simple sentence, we just gave Mortimer a chance to say "No" to being an investor but offer some help on where he might be able to point us elsewhere.
By leaving the time frame in which we hope to secure the investment more open-ended ("at some point"), we're not forcing him to pull out his checkbook immediately.
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Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.