You can never have too large a network

You should be constantly building your network

As an entrepreneur, you must meet as many people as you can.  This means that, whether you like it or not, you have to network, network, network.  It’s a simple matter of statistics.  Investors typically invest in 1 out of every 100 deals they see (in the best case).  That means you have a 1% chance of getting money.  Well, simple statistics will tell you that if you add 1% that one investor represents with the 1% that another investor represents, you have a 2% chance of getting funded.  Now, unfortunately for us entrepreneurs, it’s not as simple as meeting 100 investors to be sure we’re going to get funded… but you’re going to have a MUCH better chance if you do than if you only meet 5 or 10.

What does this mean for you?  That you have to go to ever single event that you can and make sure you’re ready to give your elevator pitch.  One other important thing you should be aware of is that because investors get pitched ideas all the time, it might behoove you to not be too aggressive about your pitch.  Be assertive and introduce yourself, show a genuine interest in the investor, and make it plain that you are an entrepreneur seeking funding, but do not be pushy.  You’ll have a much more interested audience if you build rapport with the investor first.  Be likable, and your pitch stands a much better chance.  Remember what investors do… they invest in PEOPLE, not ideas.

Now, how are you going to find your networking opportunities?  Well, find investor functions, join your local chamber of commerce, network with other entrepreneurs, and get involved with your local incubator.  If there are no incubators in your area, find out what small business development programs your local government offers and get involved with those.

Another great place to meet potential investors is through professional service providers.  This technique works best with independent providers.  That is to say, Merrill Lynch may not be too interested in providing you with an investor from their client list, but Joe Smalltown CPA might.

Finally, use your personal network.  Alumni associations are a fantastic source because they often have events to get alumni back together.  Better yet, get involved with the alumni office… they know which alumni have the extra cash available for a high-risk investment like a startup.

Okay, so now you’ve got your network to get some capital… but what about all those other people you met along the way?  Should you throw those business cards in the garbage?  Well, I think the answer is obvious.  Once you’ve gone through this process… even part of the way through, you will have found that those contacts are just as valuable, if not more so, than the investors.  This is because those contacts are your potential future clients, suppliers, and service providers, all of whom can help you build your business.  So save those cards!

Networking is important in business, but for an entrepreneur, it’s absolutely crucial.  Get out there, be confident, be assertive, and be friendly, and you will soon have a fantastic network that will get your business growing and, with a little luck, funded!