Fundraising Lessons from The Gambler

You got to know when to hold ‘em, know when to fold ‘em, Know when to walk away and know when to run.

-“The Gambler” by Kenny Rogers

When raising money for a new business, there are times when you find people that you genuinely like. You’d hang out with them, drink beers with them, and certainly go into the trenches with them.

This is all good. It feels great. You’re raising money, and you genuinely like the person you’re pitching! She seems to like you too. Despite numerous articles out there pointing out that investors are not your friends, they’re not supposed to be people you can’t stand hanging out with either.

It feels like it’s all but in the bag. But for one reason or another, it doesn’t come together. It’s tempting to keep pushing, since you’ve got good rapport, to get to a real yes or no answer. Try not to do that.

Instead, take a hard look at the situation. The person on the other side of the table may really like you too. She may believe you’re a capable entrepreneur, she may think you’re smart, she may think you’re great in many ways. But if she doesn’t believe in your business, she won’t pull the trigger just because she likes you.

Don’t get hung up on the bullshit you read about “we invest in people, not ideas”, because that’s just one of the many white lies you’ll hear out on the fundraising trail. Ultimately, it’s bullshit: the investors have limited cash to invest, and they need to see returns. They won’t bet on people who have ideas they don’t believe in, because they’re not in the bank-account-filling business. They’re in the returns-on-investment business, and there are too many people out there who may have ideas they do believe in and are people they ALSO like. Guess where the cash is going?

That’s not a reason to burn the bridge. Remember that it’s a small community, and that in 3–5 years (or less, if she was right about your idea not having legs), you may be back with another idea that she likes better. She’ll probably still like you as a person, and if you didn’t push them into some awkward corner of saying “let’s just be friends”, then she’ll be happy to hear from you.

Read the signals. Identify wrong trees that need no further barking up. Know when to walk away.

Update: A few people have emailed to ask if the subtext in this post is that Jexy isn’t going to happen. That’s not the case: Jexy is happening!