Next Coast Ventures (http://www.nextcoastventures.com) is an Austin-based venture capital firm that focuses on early-stage information technology companies.
Underestimating the importance of sales and the sales process
Before I became an investor, I had started a few companies and was a four-time entrepreneur. So I’ve raised money a couple of times from investors and bootstrapped a couple of companies.
After I got out of college, I admit I looked down my nose at friends in sales careers, since I had more of a technical background and what I viewed as a more analytical job. But I came to realize later that sales actually drives everything, not just in your career but in all aspects of your life. Everybody needs to understand how sales, and the sales process, works. I didn’t have an appreciation for it earlier in my career and as an entrepreneur raising money.
In reality, entrepreneurs are using a sales process when seeking investors. And the best entrepreneurs aren’t always the best at selling their companies.
Earlier in my career, I was so excited and had so much faith in the companies I was starting and their products. I would go into meetings telling investors what we were doing and how we were doing it, but I didn’t know how to sell.
Now that I understand its importance, I can’t believe more universities and business schools don’t teach sales. How can there not be a class at Stanford's business school on sales? Even people going into upper-echelon business schools that go into consulting or investment banking have to get clients and people to use their services. So they have to sell – just on a higher level.
I learned to educate myself. I read books, did online classes to understand the best way to think about this, since I am amazed it’s not a more formal part of education. I believe my lack of sales knowledge hindered me earlier in my career. I didn’t solicit feedback. I didn’t understand what the next steps were, or if the person I was meeting with was even a buyer. Multiple times I couldn’t get anyone to invest in my company, and I do think my lack of sales knowledge had something to do with it. I was not selling to the right audience, not using the right pitch and not listening for feedback.
There’s a lot of other capital besides financial capital.
Ultimately, I learned – especially as a startup – that it’s important to make sure a person is a legitimate buyer for your product or business. You have to tailor your pitch to sell them what they want to buy. Fortunately, one of my business school classmates had much more of a sales personality. He told me that I needed to change my pitch because it was not working. An advisor gave me a crash course on sales at that time, and lo and behold it actually worked. I raised more money and ultimately sold the company to a larger public company.
So my advice for entrepreneurs is, when you’re selling to an investor, keep in mind that you’re selling into a very long-term relationship. Make sure they are the person you want to be selling to. There are two classes of entrepreneurs: those who want to just raise money, and – the best ones, in my opinion – those who want to build a great company and grow their business.
Now as an investor, I’m still selling. But now I’m selling money. It’s harder than you think, because the best entrepreneurs are not just looking for money. They know they can get money from a lot of places. What they want to know is, what else can I bring to the table? Can I offer knowledge, experience and a good network in Silicon Valley? There’s a lot of other capital besides financial capital. It’s a two-way street.
Follow Tom Ball on Twitter at: @tball11
Pictured: Tom Ball | Photo courtesy of Next Coast Ventures