Company founders are the quintessential cheerleaders, promoting their vision and company every chance they get. But that doesn’t mean that they are necessarily the best at two core functions: selling and fundraising (and many are bad at both but excel at other functions, like technology).
While generating revenue and raising capital require a lot of the same traits, in my experience those who are good at one tend to be poor at the other.
Always Be Closing: Coffee is for Closers
Some salespeople are driven by money, others less so – but all are driven to close the deal. The more deals we secure, the better, and if in the process we generate more revenue for our organization and ourselves, then great.
Most salespeople will tell you that selling is an art. But negotiating to sell software or advertising (or any product or service, for that matter) is very different than trying to secure funding. In fact, I’ve learned if you’re really successful at sales then you’re almost doomed at fundraising.
What does it take to be a great salesman?
Ultimately, selling a good or service requires that
1. you hustle;
2. you always follow up;
3. you don’t take no for an answer;
4. you offer more and more value until you close the deal.
When I was studying finance to pursue a career in investment banking, I was working in customer service for a large bank. Repeatedly I was told that I would make a great salesman, which to a young finance grad was as complimentary as telling a woman she is handsome. Eventually I landed at a nascent online publisher and ended up in ad sales and sold a lot of ad deals despite the worst ad market since the Great Depression. The publisher in question has now evolved as a must-buy for most media buyers, but at the time it was a fairly unknown brand deemed way too racy for most mainstream marketers. I wasn’t driven by money, but I was good at selling… so until I figured out what I wanted to do next, I kept selling (and writing).
After that company was acquired, I cashed in my shares and left my sales job to start WatchMojo, where despite having the ability to bootstrap and self-finance the company I sought to raise capital because I wanted to build a really big company, fast, and because I felt that it would give me street cred, but, I was remarkably bad. I don’t think I was that bad, but the result (or lack thereof spoke for itself).
To be fair, maybe I was bad at fundraising because:
a) I didn’t have to raise capital, knowing I could rely on the proceeds of the sale and my sales commissions, so I wasn’t desperate enough to accept draconian clauses;
b) I started a content company and investors are generally adverse to content;
c) My company was based in Montreal,
d) Me just doing a bad job of it.
In all honesty it was likely all of the above. In any case, throughout the journey, I learned that selling a good or service is nothing like selling your stock.
What does it take to be a great fundraiser?
It occurred to me that as good as I was at selling (though I had no desire to be a salesman again per se), fundraising required a different set of skills and techniques. You have to:
I- Play hard to get, “be a challenge” and pretend that you’re just not all that into the other party;
II- Create the illusion that the “train is about to leave the station” unless an investor signs on;
III- Be disciplined and go through periods of time without following up with the interested investor, because the saying “absence makes the heart grow fonder” applies here, too.
IV- Ultimately, be less than sincere. Push someone to table the term sheet to shop it around, even if you have no intention of honoring it.
These are fundamentally different traits and behaviors than when you are selling a good or service.
The main difference between selling and fundraising is the outcome: unless you’re selling a unique asset like real estate, when you sell someone something, you are not precluded to working with others or selling the same good to someone else: you can keep selling the same asset over-and-over again.
In advertising, even if you sell someone an ad spot, you can sell the same spot to someone else on another day, or better yet: create a new ad unit.
In fundraising, once you close a deal, you are technically married to the investor, for better or worse.
Why are the greatest salespeople doomed at fundraising?
Ultimately, a great salesperson will be able to unearth revenue, and keep the lights on. They say the best form of equity is sales. Perhaps, but if that’s the only route you take, you might end up selling yourself short.
I’m not saying that some people aren’t born to do both well, many people are. But if you have been good at one and think you will naturally be good at the other, think again—there’s a good chance that the skills required in one aspect of business is fundamentally different than those required for the other.
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