free-moneyI had a really nasty gut reaction to a post in a Facebook group this week, and it teaches a BIG marketing lesson for you…

I’m not going to go into too much detail, but I recently accepted an offer to join a newer Facebook group.  It had to do with copywriting, marketing, and so on, so I thought that it might have something to offer.  While I don’t go around joining groups willy-nilly, I do like to discover interesting groups, and so I’m open to joining when I think it’s relevant.

Well, the other day one of the founders of the group put up a post that basically said, “Can I send you a list of people who want to give you money?”

Naturally, my reptilian brain started firing off.  People who want to give me money?  Great!

But then I kept reading.

This guy was offering a list of thousands upon thousands of Angel Investors and VCs…

For those who aren’t that familiar with the private equity investing landscape, these are the people who put money into startup and early-stage businesses, to give them the funds they need to grow.

For many businesses, getting this money is just what is needed to turn an idea into an offer, put it into the market, and start your path toward growth and business riches.

And there’s a big appeal.  Being able to use someone else’s money to grow your business means that you have less on the line personally, than if you had to scrape together your own cash and bootstrap your way to success.

Now, the purpose of today’s post isn’t to debate whether or not you should get investors, but…  In general, I think it’s better if you can start and grow a business without outside investment than if you have to resort to it.  It doesn’t apply in all circumstances, and in some cases it’s necessary, but outside investment 1. Reduces your fear of failure (a strong motivator), and 2. Significantly complicates all decision making in the company.  For those two reasons, I have a bias AGAINST getting investments unless it’s absolutely necessary.

That noted, a lot of people do want to use OPM — or, “Other people’s money” — to test their business ideas, so the idea of having the ability to reach out to thousands of investors is a very appealing prospect.

But then, I dug deeper into this offer…

Alarm bells started going off as I learned more…

Basically, no matter what he said about the value of this list, it was something he was willing to give away at a price that was effectively $0.

Which meant that there was probably no real effort that went into getting the list.  Rather, it was probably generated by scraping data off LinkedIn (he said it’s a list of VCs and Angel Investors on LinkedIn).

Which means it’s a list of people who put the keywords “Angel investor” or “VC” or “Venture Capitalist” in their LinkedIn profile.

Now, that alone doesn’t make the list suspect — however what someone says they are on social media (including LinkedIn) and what their actual title and responsibility are can vary drastically.

But there’s a deeper problem here.

This list of thousands, given away free, isn’t really valued by the person who is giving it away.

If they actually had relationships with all these people, they wouldn’t give out the information like that.

If they’d gone to great efforts to compile this list manually and verified the data, they wouldn’t give out the information like that.

All this is, is all the profiles that come up with a few keywords.

No established relationship.  No warm introduction.  No actual verification that these people are who they say they are.  Or that they actually are interested in investing in your business.

Not only that — this was being presented like it was a magic pill!

The offer itself was made as a problem-solution.

You have a problem.  You need money to grow your business.

The solution is to get an Angel Investor or VC.

We have a list of thousands of LinkedIn profiles of these kinds of investors.

All you have to do to get the list is invite your friends to join this group, and then you can email these thousands upon thousands of investors about your business.

The result?

You’re going to start getting checks in the mail from these investors!

To see how full of BS this is, just look at it from the investor’s perspective…

I happen to have spent a lot of time around this space, and have friends who are the type of investors whose name may show up on this list…

Once they’ve been identified publicly as an investor, they start to get a barrage of cold emails and the occasional phone call pitching half-cocked business ideas.  (Think all the failed pitches on Shark Tank, and then think of the even worse ones that they never let on TV — that’s who is pitching these folks.)

The longer an investor has been doing it, the more aggressively they try to filter these pitches out.

In fact, they basically consider these pitches the same way most of us consider commercial email.  We’re looking at everything we’re not immediately interested in as a hair’s width on this side of spam, and looking to delete or ignore it as fast as possible.

And generally, the more investors that a pitch is sent to, the less relevant it’s going to seem to any of them.

(Side note: I used to do hiring, when I worked for the IT training publisher.  We’d run an ad on the job sites.  The fastest way we’d screen out candidates was looking for the resume and cover letter to be personalized to the job description.  Most people, in the interest of submitting to as many opportunities as possible, simply do the one-click submit with no personalization, no customization — and their applications would be the fastest to get deleted!)

If you’re pitching to a list of thousands of investors, you’re not going to do research.  You’re not going to look at other companies in their portfolio.  You’re not going to research their website to see what investments they’ve made before, that might indicate they’d be interested in you.  You’re not going to customize the pitch to match their interests and past investing behavior.

…  And yet, it’s all those extra steps that so very few companies take that are exactly what’s going to get the investor most interested in you!

Investors don’t like to invest in lazy, opportunity-ADHD entrepreneurs.  That is, entrepreneurs who bounce from one opportunity to the next, looking for anything to hold their attention long enough for the money to start pouring in.

Investors want someone who is willing to do the work, to create solutions.  And the way you show that, from the beginning, is to make a custom pitch for a laser-targeted audience of ONE (NOT a vague pitch to an audience of thousands!).

There’s a couple bigger lessons in this…

First, a general rule: the easier it is to get access to an audience, the worse that audience will be.  If it’s a vetted audience…  If the audience has a built-in relationship with the person communicating with them…  If the audience is a proven buyer of what it is you offer…  All of those things will make getting access hard and/or expensive.  It will be worth it, but it won’t come easy.  If access to an audience comes easy or cheap, it’s probably a reflection of its true worth.

Second, all lists are not created equal, and quality is more important than quantity.  I know this is two points (not one), and they build on the last, but bear with me.  I’d be far more interested in a list of 10 investors who previously invested in complimentary startups to mine, than I would be into a list of 10,000 investors.  That way, I could give the smaller number much more attention each, invest more resources in connecting with them, and know that my message would be more likely to be received.  The bad news is that you’ll probably have to do the research yourself to find this list.  The good news is, you won’t be one of hundreds spamming them with irrelevant pitches.

Third, think critically when someone offers you something that really activates your lizard brain.  If it sounds “too good to be true,” it’s probably only a matter of wasted time and energy before you find that to be the case.

Could you actually succeed with this list?  Probably.  Are there much better ways to go about getting the same result?  Absolutely!

If you want a list of people who want to give you money, here’s what you’re going to have to do…

First, you’re probably going to have to build it yourself.

Second, you’re going to have to find out what problem people in your market want to have solved.

Third, create a compelling and unique solution to that problem.

Fourth, put an offer in the market to get your laser-targeted audience of one to raise their hand, expressing interest in your solution to the problem.

Fifth, then make your direct pitch to that one person (even if they’re on a list of 1,000 or 1,000,000, it should feel like it’s laser-targeted to just them).

Yes, this is harder than inviting 10 of your friends to join a Facebook group.  But if that’s all it took to get money for your business, we’d each own our own Facebook or Google or whatever company.

This is a huge breakthrough with all sorts of applications, if you get it.

Yours for bigger breakthroughs,

Roy Furr

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