Everyday I come across entrepreneurs and startups that have the misconception that their idea, project, product, service, and technology is worthy of investment capital. Ego kills. When I hear pitches and listen to entrepreneurs speak, that enthusiasm must be channeled in a proper and strategic way. You also have to understand investors have been pitched to, heard, and seen every brilliant idea. What is going to differentiate and appeal to the investor is your mindset, energy, and attitude. Ultimately an investor is investing in you first. Unfortunately, when a founder or entrepreneur is so invested emotionally, he/she is blind and unaware of all the risks and opportunities ahead. As a result, the entrepreneur immediately exposes their personal weakness and investors will tune out – next.
Points that count
Therefore, Emotional Intelligence (EQ) is a critical element in raising capital for the entrepreneur, as well as the investor. Starting a business or raising capital is a very emotional process for an entrepreneur. They financially invested, but I have seen an entrepreneur’s emotional investment is often far greater. Their fate and success is in the investor’s hands. Since the investor is the source of capital, they can either empower or disable the entrepreneur in a heartbeat.
How can we flip the script here and remedy this? Accelerators and startup incubators are so obsessed with business, financial, KPI models that they forget about the mental well-being of the people who are actually going to execute the business plans. Let’s not forget that studies have shown that EQ is far more important than IQ for an entrepreneur’s success according to Professor Jared Allen’s study at Texas Tech University.
The big five
Here are five critical components in Emotional Intelligence for Raising Capital:
1 Self Awareness: It’s important for an entrepreneur to have a presence and engaged to exude confidence to the investor they are interacting with to have a greater impact and to be inspirational. Additionally, self awareness will exhibit their excitement and motivation around their cause.
2 Self Regulation: Investor’s will probe, question, discount, challenge, and offer critical feedback after a pitch. It’s vital to stay composed, focused, and control your emotions under these moments. Being well-prepared for all types of questioning is always a huge plus.
3 Motivation: Coming off optimistic and positive is important, but we must not forget that its most important to do this in an authentic manner. Otherwise, investors can see right through the artificial facade.
4 Empathy: The best pitches and investments I have seen are the ones that have devised their business plan with the investor in mind, meaning they are addressing all of the investor concerns. That is why I always think its important to have a detailed risk mitigation slide during your pitch. It shows your investor that you are evaluating the potential risks and have controls in place to manage them.
5 Social Skills: It’s so vital to build a connection and rapport between yourself and investors, I cannot emphasize this enough. I see so many young startups who lack the fundamental social skills to have a basic conversation. More importantly, you must be able to communicate and represent information accurately in a professional manner.
The lure of entrepreneurship is very sexy, exciting, and liberating all at the same time, yet the reality is that it can be very lonely, challenging, and debilitating when you are sacrificing so much to achieve your dreams. Lots of previous success, with my own endeavors has taught me a lot of harsh realities from creating, buying, selling, operating, investing and funding various businesses and startups across multiple sectors. I always come back to the same place, which is investing in yourself and your mindset by continuing to learn, grow, and stay current. Ultimately, that is what is going to catapult you to higher highs and prevent snap backs that tend in happen in business life. If you do, you’ll be prepared and glide through. I can’t emphasize that the best investment you will make is yourself and your support system to be able to navigate through turbulent times.
Grow your support tribe
Personally, I have surrounded myself with the right people who lift me intellectually, spiritually, and emotionally. I have a team of therapists for my health, mindset, and executive coaches to give me the emotional relicense to succeed and complete projects. I invest in attending meditation retreats, business masterminds, and workshops where I can network and make amazing new friendships. Having the growth mindset will prevail in any endeavor you seek and investors will immediately recognize that trait.
Serif Sisman is a globe-trotting a serial entrepreneur with a finance background who has started, bought, sold, invested, operated and exited various types of business across diverse industries.