How to understand what investors want
5 August: Jeremy Stunt has experience on both sides of the table when it comes to raising funds. He explains what matters when trying to attract investors.
Jeremy Stunt started his career as a chartered accountant in the late ‘80s. He ended up working for Bearings in the finance function just before it went bankrupt, something he tells ICAEW Insights was a “fascinating experience”. He moved on to Hong Kong to work in banking, before finally returning to the UK as a leadership coach. All of this has given him a well-rounded view of communications around raising funds.
“I remember one of the struggles I had in the finance function: ‘why don't these bankers use the information that we're producing?’. Some years later, on the other side of the fence, I found myself thinking: ‘why are these accountants sending all of this information that we don't need?’” he comments.
Good communication when it comes to fundraising starts with resilience: you aren’t going to get it right the first time and soft skills cannot be learned in an afternoon. “Often, people think there's a formula to fundraising conversations. You just follow that formula and you’ll solve your situation. In reality, there can be lots of setbacks. It can take longer than you want, or you don't get what you want the first time. There's a period of unfolding experience. So being able to bounce back and be resilient in the face of what seems to be an impossible task is critical to this.”
A lot of successful fundraising conversations come down to influencing skills, which isn’t necessarily something that FDs and CFOs get to develop as they rise up the ranks of the finance function. In its simplest form, influencing comes down to understanding what matters to the other party. It’s a skill set that you don’t develop without regular practice.
“The people that are going to be successful are able to see that numbers are just part of a big picture,” says Stunt. “The numbers are important, but they are just a reflection of what's actually happening in reality. It's really about understanding the dynamics of the business and the role that numbers can play.”
There is no right way to approach fundraising from a soft skills perspective. Success comes from correctly reading the room and identifying what your potential investors are looking for. Try to understand the lender’s business model and the criteria by which they lend money. The more you understand their decision-making process, the more you can give them what they want.
“That requires some conversation to build trust,” Stunt explains. “It does also mean that you need to understand your own business really well.”
He shares an occasion where someone came to him looking for investment. They wanted a loan, but Stunt was interested in having a stake in the business. “I wanted a share of the profit because I would be taking the risk. That particular person didn't really understand that need, got frustrated and went away. They weren’t trying to take care of what matters to me as the investor.”
‘The key skill is listening’
The crucial soft skill, in this case, is listening: asking the right questions ahead of fundraising conversations (and in the meeting itself) and listening to the answers. It involves showing a degree of vulnerability, Stunt explains, which people don’t always feel comfortable with, particularly in leadership positions. There is a risk the potential investor will not respond well to you asking questions. This is where Stunt’s point about resilience comes in: you need to be prepared to fail and trust that by asking questions, you can ensure that the fit is right for both parties.
“When you buy a pair of shoes, you don’t expect the salesperson to magically know what you want. Understand what the communication preferences are and the style of the people that you're engaging with.”
None of these skills is easily learned; it takes ongoing practice. Develop an open, ‘learning’ mindset and acknowledge that you cannot know everything. By constantly striving to improve, you can develop your soft skills incrementally. “It’s about showing up as someone who's curious, always learning and understanding, while also being wise and knowledgeable.”
In the current climate, where raising cash feels a little more desperate, being able to rein in emotions, accept the factors outside of your control, and focus on what can be done, is a real benefit, Stunt explains. “When I was at Bearings the whole place was falling apart. But there were one or two key leaders who were able to stand up twice a day, every day, stay calm and attuned to what was what mattered to us as staff. That ability I think, is really important. We've also got to acknowledge that the people in the ship are going to drown if it can’t be saved. Being able to be empathetic, not to pull the wool over people's eyes, and keep focused on the end goal.”
The key to all of this is listening, Stunt concludes. “Listen to what matters to you, what matters to your stakeholders. Listen not just to the words but to the moods; pay attention at a deeper level, especially in this crisis. It’s the ability to be able to understand what really matters to people and take care of that – that’s the hallmark of leadership for me.”
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