Make an Online Capital Connection
Eager and enthusiastic entrepreneur with a dynamite concept seeks like-minded investor to provide funding for a mutually rewarding long-term working relationship.
You can laugh at this “personal” ad, but let’s be honest: Finding funding for your business can be a little like romance. You have to put your best face–ahem–ideas forward in order to woo potential investors. Indeed, websites such as Go4Funding.com are online portals that function as global matchmakers for entrepreneurs, investors and business experts. Entrepreneurs and business owners can post their company’s capital requirements in the Funding Needed section or scour the profiles under the “Looking To Invest” section.
Other sites, such as RetireAt21.com provide a forum for young entrepreneurs to ask questions, get critiques for their websites and ideas, and make connections that may lead to a deal with potential investors.
Even seeking financing through social media is a bit like signing up for online dating: substitute your bio for your business goals and personal interests for your product or service focus. But experts say that, just like in dating, being your authentic self is critical throughout the getting-acquainted phase. It’s all about building the trust required to persuade an investor to enter into a long-term relationship with your company.
Show Your True Colors
“In today’s digital world, striking deals without meeting in person is the norm,” says Lolita Carrico, an internet entrepreneur and founder of ModernMom.com and MyGLOSS.com, who estimates that about 90 percent of the people she’s worked with over the past few years are those she’s met online or through social media. “I’ve met very few of them in person, unless we happen to be at a conference together,” she says.
Carrico suggests being clear, professional and friendly, just as you would in person. “Social media tools like Twitter and Facebook also let those whom you work with get a glimpse of your personality. So I always keep my Twitter and Facebook streams professional, but also friendly and helpful,” she says.
To give her followers and potential investors a good virtual image of herself, Carrico has it down to a formula: “30 percent personal information, updates about my day, my children, fun stuff; 40 percent business updates; 30 percent sharing links to relevant news that I think my followers will be interested in that also show them that I’m on top of my industry’s news.”
It is a process that’s brought Carrico through some lucrative deals and how she was able to launch MyGLOSS.com so quickly.
“We launched almost two months earlier than originally planned because of a partner who wanted to do a campaign with GLOSS.” Carrico admits that she had never met anyone from that company face-to-face but was undeterred. Referring specifically to the space limits on micro-blogging site Twitter, Carrico observes, “I think 140 characters are perfect for people to get an understanding of me and my business. It’s actually quite efficient.”
Taking the Relationship to the Next Level–Offline
Adrian Dayton, an attorney and founder of Comrad Esq, is no stranger to striking a deal online. However, the author of Social Media for Lawyers recommends continuing offline, by telephone if you can’t get together in person. “Only 8 percent of communication is in the words; 37 percent is tone and inflection; and 55 percent is the visual/body language,” he says. “With a phone call you don’t quite get the full effect, but it sure beats the 140-character limit imposed by Twitter.”
Dayton says he’s frequently asked whether people make spending decisions through social media. “Of course not, but I have numerous examples of individuals getting exposure to well-connected individuals through social media that are able to move those conversations offline,” he says. He added that he advises owners of large and small businesses to use social media to make the connections and convert them as quickly as possible into your normal sales process. “People you meet [virtually] are still just people.”
Present a Well-Groomed Business Plan
Sooner or later those people are going to want to see more than just a status update. They’ll want to evaluate your business plan. Rhonda Abrams, author of The Successful Business Plan and founder/CEO of The Planning Shop says that if you haven’t met your potential investor face-to-face, your business plan is more important than ever. “They are judging how well you’ve done your homework by what you are putting on paper or in a presentation,” Abrams says.
She also likens the process to dating. To ensure your potential partner will see your company in its best light, treat your plan with respect. Don’t just dump the whole thing into an e-mail and cross your fingers.
“You may want to send them an executive summary first,” suggests Abrams. If you can’t meet in person, she adds, a free web-based application such as ZoHo can be used to walk an investor through a follow-up presentation highlighting the size of your market, profitability and other key points.
Check Up on Them
Just because you’re the one looking for funds doesn’t mean your potential partner should remain shrouded in mystery. Abrams warns, “If you take someone’s money you are going to be partners, so make sure you can live with them.”
Lena West, founder and CEO of xynoMedia, believes the best way for entrepreneurs see whether they are compatible with potential investors is to dig. “Don’t just rely on references; visit their social profiles and see what they write about. Ask questions about a person or a business. Based on what you find, determine if this person will mesh well with you or not, and then make an educated and informed decision,” West says.
West recently signed a book deal with an agent and a publisher based on a recommendation from a trusted social media acquaintance. “This is where we get into the real value of social media,” she says. While “people can get away with a little slickness” in person, virtual communications need “authenticity grease” in order to thrive.
West points out that while it helped to know that both her agent and publisher are from large, well-known firms, she maintains that if business owners mean what they say, say what they mean and are who they say they are, they can’t go wrong striking a deal online.
“The only thing that can happen is that you and a potential investor or partner won’t get along and–guess what?–that would have happened in person, too. But by using social media, you saved everyone time in the security line at the airport,” West says.