The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way to pitch a startup idea to investors?” is written by Erik Severinghaus, founder and CEO of SimpleRelevance.
I recently heard an unconfirmed rumor that investors are human beings and like to be treated as such. The biggest mistake entrepreneurs make is only seeing dollar signs—not people.
Whatever you do, don’t pitch your "startup idea” to investors. Investors are absolutely inundated with startup ideas, and no matter how innovative yours may seem, it’s almost impossible to get them to expend enough mental energy to care. If you think of your idea as a product that you’re trying to sell to an investor, it’s simply never going to work.
Remember that no one invests in an idea. Investors find value in companies. Those companies are composed of people who commit to working on an idea and, ultimately, toward a scalable business model. This means that even as the idea may change (and it often does), the people will hopefully remain consistent.
As an entrepreneur, you'll find the most benefit in perfecting the art of selling yourself to the investors in whom you are interested. This tactic is harder than just pitching an idea. It requires time and effort to build real relationships. Target the 10 to 20 best investors in your market and get to know them. Before you meet them, read their blog posts and tweets. Figure out what they care about, what they value, and why. Find points of overlap in your networks and use those to both build context about them and exchange a warm introduction.
Then, once you meet them, use the time to earn the right to get more of their time. Get that next meeting. Remember, this is hopefully the start of a multi-year career of the two of you working together, so treat it as such. Find things that interest them, and follow up on those things. Show them why you’re passionate and what drew you to this great idea. Be professionally persistent and relentless in your follow-ups.
There are lots of truisms in the entrepreneurial community like, “If you want advice, ask for money. If you want money, ask for advice,” and, “Investors want lines, not dots.” These all stem from the same fundamental idea that the relationship with the investor is far more important than the idea.
If you build a relationship on a human level rather than on a transactional level, investors just might start to care about you. As they come to care about you, they're likely to translate that human interest into an interest in what you’re devoting your energy to, and how they might get involved. At that point, getting them to invest becomes much more pleasant—and more likely. It may seem like an obvious approach, but following that golden rule that your mother hammered into your head is key. When you treat investors as human beings, you'll see the same treatment in return.
Erik Severinghaus is the founder and CEO of SimpleRelevance, which uses machine learning to turn customer data into recommendations for relevant digital marketing messages and was recently acquired by Rise Interactive. Erik is a graduate of Kellogg School of Management at Northwestern University.