Why Adopting the Mindset of the Investor is SO Crucial
[Following is an excerpt from Capital Mindset™ - available for purchase at BennuPartners.com and coming soon to Amazon.com]
Understanding What Investors are Looking for, How They Think, and How Best to Engage Them is the Proven Path to Success
At the heart of Capital Mindset™ is encouraging entrepreneurs to view investors and the investment community in a very different way.
When it comes to your business product, you and your team put a lot of time and effort into understanding the desires, needs, and behavior of your target customer. If you have performed this task well, then you are on the road to building a successful company.
When it comes to your business, you would never dedicate time and money to a marketing campaign without being fully comfortable that you understand your potential customer. Doing so would be a waste of time and money.
Once again, in a financing event, investors and the investment community are your customers. Dedicating time and money to a financing campaign without fully understanding the customer (investor), is equally as foolish.
Putting forth the effort to fully understand your customer – the investor - is what it means to adopt the Capital Mindset™. Doing so is crucial to your success. The fact that so many entrepreneurs could not be bothered with understanding the investor Mindset is why so many struggle or fail to secure investor capital.
You Already Take a Holistic Approach to Your Business
As you work to build and grow your business, you understand that every aspect of the company is intertwined – it is ALL tied together.
Every aspect of your company is inextricably tied to and dependent upon the next. Problem leads to the customer need, customer need leads to the solution, solution dictates the product, the product leads to the go-to-market, which then informs messaging, brand and marketing. All of it is organized together and is all encapsulated in the business strategy and infrastructure.
None of it happens or comes together by accident. It is likely that significant portions of the business strategy were built through trial and error. Mistakes were made, iterations were discussed, plans were adjusted. Through this process, you gained a deep (and sometimes painful) understanding that a weakness in ANY aspect of your business would translate to struggles in connecting with customers and increasing sales.
In other words, without knowing that you were doing it or not, you were following a holistic approach to building and growing your business. Every aspect is designed to coordinate and drive the business forward to success. It is not the parts – it is the whole. That is the entrepreneur’s Mindset.
Now - Apply that Same Holistic Approach to the Financing Process
The necessary perspective shift that entrepreneurs must make is to approach the financing process in a holistic manner as well. Just like in business, every aspect of the financing process is inextricably tied with the investors that you seek. Every aspect of the financing process must also be designed to work together in order to successfully engage those investors.
While each company and each financing journey is unique, they all share three common elements that every entrepreneur must work to optimize. These three elements are business progress alignment, effective investor positioning, and a structured capital markets process.
The progress that the business has achieved, coupled with its potential future growth will help determine the type of investor that will be attracted to your business – at its current stage. Understanding the type of investor will inform narrative, messaging, and communication materials. All of which will come together to dictate the process infrastructure, budget, and timeline you will need to build a successful financing process.
Once again, just like in the business, the three elements of a successful financing are inextricably linked. Weaknesses or shortfalls in any of these three categories will lead to real challenges during the financing process.
It is ALL connected. All three elements of the financing process combine and work together. Most importantly - it is all designed with the needs and goals or your customer – the investor – in mind.
We will dive more deeply into each of these categories throughout Capital Mindset™.
Mindset First. Tactics Second.
Capital is the lifeblood of any rapidly growing business. This is true for any company at any stage of growth. Access to capital for growth is equally important to early-stage startups, growth-stage businesses, mature companies with long operating histories, and multi-generation family businesses.
In many cases, where resources for expansion are vital, access to capital is likely more important than ANY other aspect of the business. No capital, no business.
Unfortunately, many entrepreneurs deeply dislike the process of raising capital. They don’t understand the process, and it is not a skill set that they are eager to acquire. For them, time spent raising capital can feel like an unwanted distraction from building the business, and a source of great frustration.
Many entrepreneurs are painfully aware of this inexperience and lack of enthusiasm with the institutional capital raise process. But, with no other viable choice, they launch themselves headlong – and unprepared - into the process.
However, in doing so, far too many entrepreneurs make the mistake of treating the capital raise process as an afterthought, inconvenience, and annoyance. This is the Mindset that leads to struggle – and often failure.
The good news is that there is a fundamental, repeatable, and actionable Mindset that will lead to investor capital – every time. The key lies in adopting the Capital Mindset™.
The Mindset is the necessary work. The hard work. The Mindset sets the stage for everything that follows. Tactics without the correct Mindset will be ineffective and incomplete – and the results will reflect this.
Successfully raising investor capital is the result of understanding this Mindset.
Mindset First. Tactics Second
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