Trust – the Silver Bullet of Funding
This interview was given by Robert Steven Kramarz the Executive Director of Intelliversity.
The topic is of critical importance to anyone seeking to fund a concept, from any source. That topic is Trust.
"Trust is the silver bullet in the funding, in the business of getting funding. " Robert Steven Kramarz (Rob)
You are invited to listen to the interview here:
http://intellcampus.wpengine.com/wp-content/uploads/2017/06/TrustinFunding.mp3
Or, read the complete transcript here:
Robert: Hi, again. This is Robert with P5 Radio, and this is part of our ongoing series of conversations with people that are making a difference, people we think you may want to listen to. Our guest today is Robert Steven Kramarz from Intelliversity. Hi, Robert.
Rob: How are you?
Robert: Pretty good. Pretty good. Listen, last time we talked, we talked about the "Are you Fundable" program at Intelliversity, where people can answer that fundamental question. Now we're going to do a deeper dive into the second part of that, which is being prepared to talk to people that you want to get money from for a particular operation. Do I have that right, Rob?
Rob: Yes, you do have that right.
Robert: All right. Good. One of the things you mentioned in our pre-interview discussion is that when somebody's preparing, we're going to do a scoring. We're going to do, help them with their funding strategy, and you're also going to help them with what to do on the particular interview, so given those three things that we're going to talk about, let's start with, why do we need to score people, how does all that work?
Rob: All of it, Robert, all of it has to do with trust. Trust is the silver bullet in the funding, in the business of getting funding. If you know how to evoke or generate trust by the investor trusting you, all of the rest of it is just, is polishing the apple. If you can evoke trust, you have 90% of the job, and each of these little steps that we talk about, scoring, and then strategy, and finally how to handle the interview itself, this all has to do with trust.
Robert: Could I give you an example of that, why that's … To make that obvious.
Rob: The example I used with you earlier was, suppose you're Elon Musk, who's my hero, one of my heroes, and many others likewise, as an example of a successful innovator with a world-changing vision. If Elon Musk today walks into a venture capitalist office, or any investor, and asks for $10 million, or $50 million, he'll probably get it without much of a … I suspect the venture capitalist will have some intern read the plan, but it really won't matter, because what is going on is that the investor trusts that Elon will do a good job, and will make him proud, and will certainly make him a profit. He has that trust because of his prior successes, recent successes. The innovators that are going in front of angels and venture capitalists don't have that immediate recent success level. If they did, they wouldn't be listening to this broadcast, so you wouldn't be … You wouldn't need this, so the question is, how do you generate and evoke the same kind of trust on behalf of the investor so that you don't have to fight very hard to get the money? In fact, you don't have to fight at all.
That's the thing that we deal with here at Intelliversity, is how to create that trust. Silver bullet. It's the silver bullet.
You start with scoring, by that I mean … Yeah, the scoring that I'm referring to in the preparation stage is where we go and score all of the material that you've produced so far, for investors. Your pitch deck, your business plan, your website, your executive summary, your all of that stuff, your PPM. Everything that you've prepared for the investors, we look at and we see, will it, really will it generate trust or will it generate distrust? That's what the scoring's all about?
Robert: That's really a platform for further conversations about the funding strategy. You have to score so you can see where the gaps are, and then build up the fund.
Rob: Really two separate things, Robert. Once we score all of the materials, then we know what changes are needed, and what maybe new materials might be needed that will evoke and generate trust on behalf of the investor. The funding strategy is separate from that. The funding strategy is now that you've gotten the materials all done together so that you're trusted, now to whom do we talk? What do we ask of them? What kind of investment do we want, and who do we seek it from, and how much money? Once we start asking that question, it's still about trust. Imagine if you … Suppose you could get, on your first round of funding, $10 million and give away 1% of the company, which by the way, people do ask for that. The company is worth a billion dollars, so I'm going to get $10 million and give away 1% of the company, but if you were to do that, and the company's a startup, or a very early stage, no one's going to trust you, because they'll think you're a little wacky, okay?
It's not because the company isn't worth a billion dollars ultimately, but it's not realistic to expect anyone to believe that it's currently worth a billion dollars, because there's a lot of risk involved. There's a lot of things that can go wrong, okay? If you ask for something silly, you're going to lose their trust, and there's no way forward from that point out. The reason we develop a coherent funding strategy is that you have to know what actions to take, who to talk to, but it's also part of creating the trust you need when you talk to people. That make sense?
Robert: That makes a lot of sense, and you have to be realistic, or nobody really is going to pay much attention to you.
Rob: Right. An example that I give that I want to give is similar to dating. If you're out trying to meet people to date them, to meet someone to date, whatever your purpose is, it might be to have fun. It might be to have a lot of fun. It might be to get married. Might be something else, to meet somebody that has, fulfills a need in your life, a gap in your life, or brings you glamor, or fashion, or money, possibly. There's a lot of reasons to date, okay? If the people you date don't trust you, if they think you're out to use them or abuse them in some way, you're not going to get off first base. You're not even going to get to first base. You strike out. You strike out from the get go, so the very first thing in dating is to learn how to evoke and generate trust before anything else. The same thing, think about it. The people you dated before you … If you're married, before you got married, the people you didn't trust didn't have a shot, no matter how much money they had, or how much …
How good looking they are, or how successful they are, they didn't have a shot if you didn't trust them. You got to remember the investor first has to trust you before you have any chance of getting their ear.
Robert: I got that. That's a great illustration, which really takes us to kind of the last step, really, which is what to do on the interview. What can investors do on the interview that's going to make that trust even more approachable?
Rob: Right, so after we score your preparation, and after we fine-tune your investment strategy so that it is realistic and actually achievable, both generate trust. Then we'll talk directly about the issue of, how do you go into an interview with an investor and evoke and generate trust person to person? Which George Kenney, who's the head of a very successful venture capital firm and a friend here in San Diego, Shepherd Ventures, likes to say, "You cannot press the greed button until you first press the trust button," and now you can see why right? You must, but no one does that. I'm telling you, nobody, until they get our coaching, our training, or George's, which by the way is called the Entrepreneur'$ Bootcamp, which is an advanced version of what we do … He'll be a faculty member of Intelliversity shortly. No one knows how to do that until they get the right training. It's really very, very rare to find an innovator or entrepreneur who knows how to just naturally how to generate trust.
Robert.: I have to tell our listeners that you've written 10 blog posts in the last equal number of weeks on the matter. Obviously, trust is very important to Intelliversity, but I wanted to direct the listeners to that resource because there's an awful lot of really good, free information on the subject of trust in the blog. The website is www.intelliversitycampus.org, and people can go there. Obviously, there'll be a link on the website where this podcast is located as well, but that's Intelliversity, I-N-T-E-L-L-I-V-E-R-S-I-T-Y campus.org, so I encourage people to go ahead and take advantage of that resource. That was my quick commercial, but … You also, before you started talking about the role of trust, there was a whole series which I found rather interesting on the power of diversity. Maybe you can talk about how diversity impacts trust for investors.
Rob: Yeah, thank you for that. It's really fundamentally the same issue. It just is not obvious. We're not interested in diversity for diversity's sake. We're really not interested in political correctness, politically correct behavior or righting a historical wrong. Not saying doing that is bad. I'm just saying that's not the reason why we advocate diversity. We advocate diversity in a company, in the executive team, because it works. Works really, really well, and the lack of diversity, by that I mean diversity in gender, in background, ethnicity, and most important in the way that the people on the executive team think, their leadership style, their thinking style, and their way of working day-to-day. If there's no diversity, the company's very likely to fail, because you need to have diverse characters, diverse thinking styles, diverse leadership style, to ensure that the company can respond to unpredictable events. Changes in the environment, changes in the market, new competition, unexpected problems.
If everybody thinks the same, then you're only going to have one point of view, and that's … There's not enough diversity to guarantee that you're going to find the right answer. It's only with diversity that you have the ability to respond to unpredictable, changing environment and problems, and that's been proven time and time again in so many different ways, both statistically and in terms of theoretically, psychologically. It happens it's also beneficial to diverse groups, but that's not the reason we're doing it, we're advocating it. We know that diversity works. I'll repeat that. We know that diversity works, but why does it work for the investor? Why does he care? Obviously, if the investor is acquainted with the research that diversity works, they're going to like you. They're going to see that you're much more likely to succeed because of your diversity, but that's not why it works for the investor.
Robert: Right.
Rob: The reason why it works is that it creates trust in you, in the innovator, in the Vision Master. The Vision Master, the founder, the innovator, the one that has to sit in front of the investor in a conference room, and asks for millions of dollars, or hundreds of thousands of dollars, or possibly tens of millions, and has to look in another person's eye, and say, "You can trust me with your money." That's where diversity works, because of you, the innovator, the Vision Master, first of all, you know in your gut that you have the ability to respond to different kinds of problems and circumstances. You're not bullshitting anybody. You know the truth and you can respond because you have the diversity on your advisory board and on your executive team to find different solutions to different problems. Yet, that's not really why it works.
Robert: Tell us why Rob.
Rob: It works because the investor's going to trust you more if he can see that you trust other people more. Let me explain that. Let me try it a different way. In order to make use of diversity, you have to trust people, people who are diverse, that are not like you. Different backgrounds, different gender, different experiences, a different way of thinking, different way of acting. In fact, they're very likely to create, pardon me, the diversity is very likely to create tension in the executive suite. People won't always agree with you. People will bring you information you don't want to hear. You won't always agree with them.
Robert: That's a good thing.
Rob: That's a good thing. That tension is essential for the success of the company. That's a good thing, but where this is going is, if you don't have diversity in your C-suite, the investor's immediate conclusions can be, you don't trust people. If you don't trust people, how can I trust you? Think about it. Think about people you know that only surround themselves with people very much like them. They're very rigid, inflexible, and only do things a certain way, right? It has to be their way. It has to be their way, right? That's why they surround themselves with like-minded people and only like-minded people. Can that person be trusted? What happens when the investor wants to give you some advice, or wants to give you some coaching, or wants to help with a problem? You're an arrogant son of a bitch who only surrounds yourself with people just like you, who think just like you and agree with everything you say. No diversity. You're not going to listen to the investor. You're not listening. You're not capable of listening.
When you have diversity, and I'm not saying this is the only reason to have diversity on your C-suite, but when you have diversity, you're sending a signal. Maybe it's unconscious, but you're sending a signal to the investors that you will listen to them when they coach you, that you're coachable, that you're open, that you're flexible, that you're responsive, and that you can handle a new point of view. That's going to generate and evoke trust. They're going to trust you.
Robert: Wow! Does that make sense?
Rob: It makes a lot of sense, and I think it's funny. Kind of closes the loop and takes us right back to the beginning, where we were talking about how much all the preparation for pitching an investment is about building trust. I find it very interesting that that's kind of the same way that Intelliversity goes to market. We understand or excuse me, really you understand that the magic of trust also works in business in acquiring clients. We have a program. It's now called the Fast Track to Funding program, and the first part is free. We offer the scoring that you mentioned for free. We also offer a 30 to 45-minute consultation with people to review their scoring, and really the purpose of that is to build trust, so they can decide whether they want to do business with Intelliversity or not. Is that a fair statement?
Robert: I think that's fair. By the way, I just want to say that that's initial scoring that you do before the first conversation is different, a different scoring than the one that we do when we're preparing for investing.
Rob: Right. It's much simpler. It's a preliminary, very simple scoring. There at the very beginning, we're just looking for red lights. We're just looking for things that immediately stop any investor from putting money into this, into your company. Then we can advise you, you're just simply not qualified yet to get investment, but that's a different scoring than the scoring we do later on. Just showing that clear on that, but that doesn't answer your question.
Okay. Your question was, why do we do this first free consultation?
Rob: The purpose is so that you will trust us, and we'll trust you. It's all about gaining, getting into a trusting relationship with each other. There again, trust is the silver bullet. My message is to … For most of the people listening to this broadcast, already are involved in raising capital, because that's how we met you, out in the … Either on the web or in person, because you are seeking capital. Clearly, you believe that you are qualified to raise capital, your business I mean is qualified, so I don't want anybody to think that we're doubting, there are any doubts about that. The purpose of having this free initial consultation is just to gain some trust, you trust us, or me, and our trusting you. We're capable of having a conversation about funding your business.
Robert: You said something in our last conversation where you said that, and it really stuck with me, was that are you fundable yet? In other words, the implication is if somebody isn't fundable, they will be, and that's part of the process, and I-
Rob: That's true. That's true, but I want to shift the emphasis of that conversation, because it may have sounded like that we think that most innovators coming to the initial consultation are not really qualified, and we're going to put a wet blanket on your dreams. Nothing could be further than the truth. Probably most are qualified. There may be some cautionary issues that you want to deal with, but the main purpose of that interview is to establish trust between you and me.
Robert: Okay. What's next? We go into the preparation phase?
Rob: Absolutely.
Robert: To get the Fast Track to Funding program up, it's right on the homepage of the website, which is the www.intelliversitycampus.org. People could go there, learn a little bit more about the program, register, download the simple scoring methodology, and schedule an appointment with you directly. That's the process, right?
Rob: Yes. That's right. Takes a couple of minutes to fill out the qualifying form, and then set up an appointment with me on one of our team. At this point, I'm doing these myself, these interviews, because I think it's really important to get acquainted personally. You go, and you go onto our website, and there's a very simple calendar there, and you just pick a time. I'll get notified, and you'll get an email reminding you of the time of the appointment, and we'll be talking in no time at all. Or you can just email me some available times, and I'll call you.
Robert: Kind of in closing, I wanted to make the statement that one of the things that are very hard to pinpoint when you're choosing somebody to work with, to get a business funded, is everybody kind of has … I don't want to have a similar component, but you do this, you do that, you do this, and you do that, and then this happens. I get yours is unique, but I also wanted to point out that the magic behind the process is that you're dealing with somebody who … You in this case, who is very well-rounded in the entire field. You've been an innovator. You've been a venture capitalist. You've been an angel investor. You really understand the whole process. You know all the players and the types of people that are involved, and you know how to make this work way beyond the sum of the parts. I think that's the power, and the power of Intelliversity's process that may not be apparent in these conversations, so I wanted to call it out directly.
Rob: Thank you. It occurs to me that one of the big issues is the third phase of the funding process, which is gaining access to investors. That's also a matter of trust, because obviously if an investor trusts you going in, you're going to gain access to him or her. I will give you a … Give the innovator, give you a foolproof method for gaining access to virtually any angel or venture capital.
Robert: All right. This is the silver bullet.
Rob: It's all based on trust. There are particular methods for evoking and generating that trust that is foolproof, that will work every time.
Robert: Let's stop here, more news as it breaks [laughter}
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Posted in Blog, Entrepreneurial leadership, Investor access, Pitching to investors
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