“The best entrepreneurs specialize in making “new mistakes” only.”
― Jeffry A. Timmons
I’ve raised over $50 million for real estate and other private equity deals.
Today, I want to talk about the things no one tells you when it comes to raising capital.
Oftentimes you hear that you’ll raise all of this money, leave your job, and sail off into the sunset.
That’s a nice story and all, but it’s not totally true.
A lot of things will happen that you won’t expect.
In my time investing, I’ve been surprised by a few things.
We’re going to talk about my top three as well as the one piece of advice I have for those of you looking to raise capital.
If you’re not looking to raise capital, that’s okay!
There’s a lot to be learned by peeking behind the curtain.
1. Be a Storyteller
When you raise capital, you need to be a storyteller.
Now, I don’t mean making up stories or expounding the truth.
I mean telling a really good, really convincing story.
Specifically, you should tell a story about who you are and what the investment is.
One of the challenges as a capital raiser is that you will often start from somewhere else.
I started as a medical sales professional making over $200,000 a year.
If I was an action figure, I would have been Medical Sales Bronson.
Because I had that start, I needed to tell a different story when raising capital.
I tried to find a way to speak to the things that I really valued about investing, both in real estate and other assets.
I spoke about getting cash flow and making money while you sleep.
It’s really important to paint pictures that put you and your goals at the forefront.
You also should be aware of how you’re presenting yourself.
For example, let’s say I’ve had the same car mechanic for 10 years and all we talk about is cars.
One day, they say they’re doing a real estate deal and want you to invest.
That’s a nice offer, but they’re my mechanic!
What do they know about real estate?
In contrast, if I talked to the mechanic about the deals they were doing, that’s a pretty cool story.
I would understand more where they’re coming from.
People respond to stories.
You see it all the time in marketing.
According to the International Journal of Advanced Research, storytelling builds emotional connections and has positive business outcomes.1
It’s important to tell stories about what we find interesting or value about the investments we’re doing.
2. Know, Like, and Trust
There’s a marketing concept called the Know, Like, Trust (KLT) factor.
It applies so well to investing.
Before somebody invests, they’ve got to know, like, and trust you.
I think that’s true.
When you do business, you have to know who you’re doing business with.
You need to like them.
You also need to trust them.
A lot of people would probably say the most important of those three is trust.
You should never do business with someone you don’t trust.
However, I think the most important thing is actually knowing someone.
If you’re a person who raises capital, most people won’t know who you are.
You need to put yourself out there
Present yourself as someone who adds value as you get to know people.
Of course, you obviously need to be a trustworthy person as well.
You need to be likable.
But you should prioritize telling people who you are first and foremost.
When you forget that step, you likely won’t be very successful at raising any capital.
3. Losses Suck
The last surprise is one you usually learn the hard way:
Losses suck.
People really don’t talk about this enough.
It’s perfectly normal, but it still doesn’t feel great.
I’m a passive investor as well as a capital raiser, and I experience losses in both positions.
Ken McElroy, a good friend of mine, has also had losses.
If you’re in this business long enough, something won’t go as planned.
A deal could go wrong, for example.
There is always risk involved with investing.
These can include the potential for a large loss, below-target return, and lack of control.2
The challenge is spotting them in time.
Sometimes, deals can look like a slam dunk, but end in disaster.
When that happens, you need to be honest, both with yourself and with others.
Tell people how things didn’t work out.
Apologize, if necessary.
Then, talk about what you’re going to do about it.
Having honest conversations like that is very important.
You need to show people that you won’t run away when things get tough.
It won’t always be rainbows and butterflies.
You need to prepare yourself to meet those challenges.
If you don’t think you can handle that, you probably shouldn’t raise capital.
Developing a risk tolerance comes with the territory.
4. How to Get People to Know You
Let’s end on a piece of advice:
How do you get people to know you?
I said it was the most important thing as a raiser of capital—so how do you do it?
When I started out, people told me to start a podcast and write some blogs to get my name out there.
No one heard about me that way.
What actually worked is bringing value to other people.
That pushes you to be a leader in the capital or real estate space.
You look at different people in different situations and figure out how you can help them.
That’s a lot more effective than putting out content only to get some name recognition.
If you do put out content, you should do so after building up that network.
People will be more likely to listen to what you’re talking about.
Then, you’ll provide even more value to them.
I’ve had around 2,500 phone calls with high-net-worth people.
I know who I’m trying to help.
Typically, it’s a male business owner over fifty.
They don’t all meet that description, but that’s the most common.
When I talk to them, I think about what their biggest challenges are.
Then, I try to offer them a solution.
That’s how people get to know who I am.
When you share something valuable, people will share it and give you feedback.
If you’re in capital raising, you need to attend events.
Ask questions.
See what leaders in the space are doing and see how you fit in.
Educating yourself is the best favor you can ever do for your future.
Now I want to hear from you!
What are some of the challenges you face in raising capital?
Let us know in the comments.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Check out my bestselling book on Amazon!
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. Anny Mondal and Anish Chatterjee. “THE STRATEGIC IMPERATIVE OF STORYTELLING: ENHANCINGCONTENT MARKETING AND ADVERTISING CAMPAIGN SUCCESS.” International Journal of Advanced Research (2024). https://doi.org/10.21474/ijar01/18787.
2. Robert A. Olsen. “Investment Risk: The Experts’ Perspective.” Financial Analysts Journal, 53 (1997): 62-66. https://doi.org/10.2469/FAJ.V53.N2.2073.
