Your commitment is key! As an angel investor this is one of the main factors I look for in an entrepreneur before I even consider investing.
To give this statement real meaning, let me share a story about commitment that changed my life. It still affects decisions I make almost every day.
One day I was speaking at a CEO networking event and I met a gentleman who had recently retired from a multi-billion-dollar company where he ran a billion dollar division. We started talking about commitment and he shared with me that his division spent over a million dollars on a study about commitment. Needless to say I was floored that they would spend so much money on this subject. They did so to improve their company’s performance.
In the study, they found that the more a person is committed to his project, the better the chance of his being successful. Even then it is still hard work and often a really tough journey. He explained that they came to the conclusion there were different levels of commitment. This was a very interesting discussion, and it got real sobering, real fast!
Their study of these levels of commitment revealed that if YOU aren’t one hundred percent committed, then you really don’t stand much of a chance to succeed. Here are the numbers as I remember them. They are quite sobering.
• People who are 70% committed only have a 20% chance of success.
• People who are 80% committed have a 40% chance of success.
• People who are 90% committed have a 65% chance of success.
• Peoplewhoare100%committedhave a 75% chance of success.
I hope that everyone reading this will take this very seriously and really think about your “level” of commitment. It takes commitment to your venture, your capital raising efforts, and your business.
Every day since I had that conversation, whenever we are making decisions about starting a new company, investing in a company, starting a new division, a new marketing plan, or basically anything, I ask myself if I am one hundred percent committed to seeing this through. Will I have a “never give up, never quit” attitude? Will I allocate the proper time and resources to make this a reality? Am I one hundred percent committed to the success of my project?
This thought process has saved me thousands of wasted hours and tens of thousands of dollars. Everyone who knows me knows that I am a never give up – tenacious – I’ll figure out a way – committed individual.
The very minute you accept that first check from an investor, you must have a new commitment level, because you are taking someone else’s hard earned money to fulfill your dream. One of the things that I look for as a personal investor, the thing that all professional investors look for, is commitment. Investors must be able to see, hear, and feel commitment every time you mention the project.
I can’t stress how important this is, and how important it is for you to make sure your investor prospects understand your commitment.
When I was an investment banker, people would ask me to raise money for them. One of the first things I would ask is, “How much of your own money have you invested in your company?” This was a great question from which to gauge their commitment level. You better have a good answer when you are asked this question. I can promise that it will be asked.
Now, if you have a great project and simply have not had any money to invest in your project, that’s okay. But if you have money and have not been willing to invest in your own project that screams a lack of commitment. I want to hear the words, “I’ve invested every dime I have, mortgaged my house, spent my savings, and borrowed as much as I could on every credit card I have.” That shows commitment.
The next question I would ask is, “How much money have your friends and family invested?” Of course most of the time the answer would be something like, “Oh Greg, I would never ask my friends and family to invest.” Wrong answer!
I know it can be a mental hang-up for some people to ask their friends and family to invest in their deal. They may feel uncomfortable doing it. But how can you possibly ask an investment banker, or anyone else for that matter, to invest in your deal if you’re not comfortable asking your own friends and family? Investors must see that you are one hundred percent committed. Having the courage to approach friends and family is one way of showing commitment and confidence in your project.
Investors want to know that you are all in. They want to see that you have absolute faith in your own dream, faith in yourself. In order for people to invest in your deal, they must believe in what you are doing and in your vision. You want people’s support because of your absolute certainty that, when you are successful, they will make a lot of money. You want those who get behind you to feel good about supporting you. As long as they invest with a proper understanding of the risks versus rewards, it will be okay.
You must go into this with absolute faith in your dream and your eventual success. This is the level of commitment that an investor looks for.