You’ll hear over and over again how difficult it is for entrepreneurs to raise money out there, right?
And generally, that’s quite true for the majority of tech entrepreneurs in Minnesota, where the odds are it either doesn’t happen despite best efforts, or it does happen with way more time and energy spend than anticipated.
With few exceptions, the process is full of friction, it’s high risk, and super stressful — especially for first timers who don’t know what’s all involved but are out there pushing hard and learning as they go. Worst of all, the activity takes resources away from the most important thing a business can do at any point in time: serve customers.
Now imagine you’re reading something on the Internet that was misleading. Or, picture meeting someone out there in the big wide world who said they do/did a thing in business that they actually don’t.
When was the last time you were on the receiving end of either of those? Maybe it was yesterday? It’s part and parcel of being in business and perhaps one the most underrated entrepreneurship skills in box: the ability to detect bullshit as necessary and move right along.
It doesn’t have to become a big deal, tends to happen naturally and swiftly for those versed; sifting people out is an acquired business skill and it can be learned, practiced and polished just like any other skill out there though it’s not taught in any classroom. The sooner an entrepreneur starts sharpening this skill, the greater chance of success they will have in every capacity, the least of which is fundraising.
So for the founders and entrepreneurs reading this right now, those who may be in the midst of it or approaching that scenario, maybe thinking about it someday — do become wide aware of people who professionally represent themselves as something they are not. Ask real and direct questions upfront, seek credible peer references, and tangible evidence that supports the story you’re being told.
Maybe the easiest profession to fake and media hook is that of the investor, people who pretend to have money and make financial investments in any capacity (angel/vc/etc) but really don’t. Back in the day, we fell for it too! It happens and you can read about them on the Internet, since most media orgs are afraid to ask real questions and tell how it is, more concerned with feel good clicks than fact finding and truth telling.
Not saying that this is just a Minnesota thing, though there is a concern that people here can be too passive, afraid to call someone out on their BS, or maybe just don’t want to admit to themselves their being taken advantage of. It’s easy to get emotionally involved and really want to believe people even those who have fooled the media. But that’s not how great business happens, sustains and grows within a community or industry; it comes down to a clear representation of all parties capacities and situation based on a combination of factors that start with the facts of reality.
Investor posture is usually fueled by some benign yet waste of your time ego drive (look at me everyone, I’m an investor?). Sometimes it’s a media game to get attention with the hopes of gaming a story to attract the money that doesn’t yet exist (look at me, I want to be an investor?).
It can also come with a much darker side though, whereby the founder/entrepreneur is lured in with the appeal of money and then unknowingly manipulated. It then transforms from a dynamic of investing to one of providing consulting and management services, fundraising from other investors, basically anything other than actually writing checks made out to the entrepreneurs business like a real investor does.
Instead, it ends up being the opposite — and you can’t make this up because it’s happening out there right now — the entrepreneur starts writing checks/carving equity/options/warrants out to the same person (or fund) that pretended they were an investor in the first place. WTF.
Never doubt someone who says they are going to do something at a future date because it always starts with the vision and a set intention, regardless of what side of the table you’re sitting on. A fund that has no actual money in it is not a fund, by definition. It could be someday, but that’s not today, so don’t waste your precious time and attention in pursuit of that which is not real right now.
Real investors prove themselves by writing checks that clear today so you can get back the business of serving more customers tomorrow — and Minnesota’s tech entrepreneurs deserve nothing less.