How To Look For Investors The Wrong Way

When looking for investors, one of the most important things I have learned is that the talkers never walk and the walkers never talk.  From my experience, the best investors that I have come across have come through with what they did, rather than what they said they were going to do. Big difference. Unfortunately, I learned that lesson as I did the rest, through a painful experience of my own.

Looking For Investors The Wrong Way

In my second company with Gary, The president of our finance company mentioned that she was going to introduce us to a gentleman who apparently had the financial means to give us the capital we were seeking, as she knew we were looking for investors to help us through our growing pains. After speaking with her, however, the vice-president pulled me into his office to warn me about the person that we were about to speak with. He said the man loved to talk about himself and seemed to promise the world to everyone, yet he had never seem him once carry though with an investment in a single company in all the years he had known him. He wanted me to know this up front, because I would never know this when meeting him because he was extremely articulate, well educated and impressive, and easily fooled and deceived whoever was in his company. I appreciated his advice, but figured I had nothing to lose.

The Meet & Greet

The investor’s name was Jack and he was a middle aged, very distinguished looking man who owned a liquor distribution company in California. When speaking with him at first, I was a bit taken aback by his extreme downplaying of money needed, as he assured us a million dollars was hardly an issue. He mentioned that one of his partners was an Arab Sheik, another owned a bank, and both were normally involved in capital infusions of twenty million dollars and higher. He was even sharper and more articulate than anticipated and I could see how easy it was to fall for his line of sh?t…because I had fallen deep already.

After a few talks back and forth, we sent him our business prospectus for him to review with his partners. Upon speaking with him next, he told me he agreed to give me the money that I was looking for, and he would have a bank check available for me the following week.

The Man With  A Million Bucks

The following week, he called our showroom and one of our sales people answered the phone. He asked to speak to me and, when our salesperson asked who was calling, he replied, “the man that’s giving your company a million bucks”.

I found it a bit out of place and tactless to say such a thing, being that it was nobody’s business that such a deal was taking place. I decided, however, to let it go so as not to bite the hand before it fed me.

Weeks went by and I hadn’t received either a check or a phone call from Jack. After repeatedly trying him on the phone and receiving no response, I went to speak with the president of our financing company again, to ask her if she had heard any word from Jack. She replied that she had heard from him and that he had decided to pass on the investment.

He never even called to tell me. We never spoke again.

The Hard Lesson Learned

There are certain flashbulbs that should light up over your head anytime you come into contact with someone that promises you the moon and the stars.

A good rule of thumb is the more a hard-working entrepreneur earns (as opposed to inherits- big difference), the more careful they are to let go of the money they have worked so hard to make. The same rule applies to their approach to investing, especially when they are considering making an investment in an area that they are unfamiliar with, which was the case here, as the man and his partners were not familiar with our business (fashion). When an investor not familiar with your market is looking to invest, they are usually extremely slow moving, ask a lot of questions, and typically request a ton of information on the industry as well as any and all other relevant information so as to educate them on that particular market.

Truth be told, in most cases, investors like to stick to what they are good at, however this is not always the case. I had previously never witnessed such a person make a quick, hasty decision to spend such a large amount of money. Even if I had, I sincerely doubt such a person would shout it to the world, as such information is often even more private to that person than anyone, and they would not wish any outside person to know such personal information.

I had been warned, witnessed the distress signals, but still was blinded by the sight of a million-dollar check glaring in my face, though I never witnessed such a sight… at least not that time.

There is one addition to the rule…not only do the walkers never talk and the talkers never walk, but after the talkers don’t walk, they invariably hide and/or disappear…a la Jack.

Have a great day!

MJ

The following is an excerpt from How To Ruin A Business Without Really Trying… To receive complimentary chapters, sign in below to get a download link. For more information about the book, Click Here

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