Would You Invest in YOU?

When asked what I do for a living, my usual answer is that I massage startups into something fundable. This requires a lot of work and starts with a screening process. I don't want to waste time on non-fundable projects. And screening step #1 is to ask the founder what he or she would do with $10 million if they won it in a lottery.

I'm surprised at how many entrepreneurs would invest in almost anything BUT their own project. Seriously y'all, if you won't invest your money in your own project, how can you expect anyone else to.

It gets better, when I confront the entrepreneur with this question, they often respond that they are looking for an investor who can afford the risk and wouldn't feel the loss of it didn't work out. And they say it with a straight face.

Look folks, people with money didn't get that way by not caring about losing any of it. They do take risks, that's the norm, but they take calculated risks. And part of that risk calculation is examination of the entrepreneur. After all, you are a part of the product.  If you have a profitable business that is seeking growth funding, well you're pretty much vetted. But for startups, the investor wants to see some passion and skin in the game. This might be a cash commitment, acceptance of debt, returning to graduate school for some expertise or simply doing what's needed, when needed.

I recall a story about a prominent China manufacturer in Britain that only hired mute people as a means of protecting the secret to their unique manufacturing process. A man who later successfully started a competing company faked being a mute to get a job there until he learned the craft. Now I don't recommend this kind of corporate espionage today, but you get the point. This guy was investable.

Key Learning here: Before asking for money from any investor, ask yourself, Is this good enough for me to invest in?"