Fundraising: communication and closing devices
Learning lessons from other industries - related or otherwise - can be invaluable
We’ve often thought that the top investors and operators are ones who possess both creative spark but a knowledge of history. Many wise people have said many wise things on the subject [insert your favourite Churchillian quote here]. For us, that knowledge should extend to other industries and areas, perhaps totally unrelated, that we can learn from.
We are going to share a couple of examples taken from recent things that we have watched: Oprah Winfrey and communication, Bernie Madoff and the principle of scarcity. Apologies for what could be controversial source material though our content is unrelated to any of that.
Oprah: Master Communicator
Oprah Winfrey, whichever way you cut it, is phenomenally successful and that success has its foundations on being able to quickly foster good rapport with others. That requires excellent communication: something we struggle with from time to time. Given that her salad days were a little before our time, we were excited to watch her in action a couple of years ago. One moment particularly struck me: the silence-silenced moment which was duly given the internet meme treatment.
Think what you like about the subject matter however this is powerful stuff: powerful question asking following effective listening, eye contact, body language, tonal change. It worked too: I sat up and listened on her demand.
It’s something that we have enjoyed putting into practice in the following months and years too. Fundraising can be dry work, not least for potential investors. They’ve often seen and heard it all. My version of ‘an Oprah’ made its appearance during the IPO roadshow for Forward Partners in the summer of 2021.
Madoff: saying “no”
We recently watched the Netflix documentary Madoff: The Monster of Wall Street. Documentaries which investigate extremes of human psychology be it climbers, killers, cyclists or con-men seem to fascinate us all.
Similar to the recent FTX debacle, Madoff’s fraud was preposterously simple. SBF funnelled client and investors money straight into his own account and purchased a very expensive smokescreen of influence. Madoff operated a 101 ponzi scheme (from two floors below his legitimate business, in the same building) which ran to $64.8bn with zero real trades to back it up.
There are so many things to be fascinated with here though one particularly leaps out: how many people he turned away and how often. It appears that if you were cold inbound (or not funnelled through a trusted source) your money would be declined. That may have partially been about self-preservation though that usefully came hand-in-hand with exclusivity. Having perceived scarcity is a well founded principle of influence and certainly worked in his favour.
How does this apply to you, or Tikto? While we haven’t yet raised sixty billion dollars for our investment activities we have a small number of investors who we work closely with. That is partially by necessity. We complete investments on a deal-by-deal basis and we can only manage so many conversations at any one time. Having too many investors in any given deal would be unmanageable. As a result, we’ve found ourselves getting into good conversations with investors but needing to say “not yet”.
Perhaps it’s scarcity working in our favour, or honesty, but saying no hasn’t (as far as we are aware) turned any conversation ‘off’. Rather it has fostered ongoing dialogue with people who we hope will be part of our network and business in the years to come. Indeed I caught up with one such investor a couple of weeks ago for a post-work drink.
Tikto
At Tikto, we purchase majority stakes in EBITDA profitable businesses and follow that up with incremental growth capital. We bring our network of experienced operators to help execute a business plan for the next phase of our portfolio companies’ growth.
Get in touch: hello@tiktocapital.com
NB
What we wanted to avoid and are absolutely not talking about above are thin similes such as this article that was recently forwarded to us. An entertaining perhaps, though unrelated learnings within.
However, if you thought that we’ve failed and fallen into the ‘stretched-simile’ category please do let us know.