Why “Smart” Money Investors are so Critical to Your Success

If you’ve started a business or are thinking of doing so, here’s an alarming statistic for you. Up to 85% of businesses fail because they run out of cash. If you want to be part of the 15% that succeeds, you’ll need to be smart about how you raise money. And that means raising money from “smart money investors”.

So, what exactly do I mean when I say “smart” money investors?

I mean raising money from investors that bring two key elements to the table. Of course, Smart Money investors bring cash to the deal. But they bring much more. Smart Money investors also bring knowledge and relationships that can accelerate the growth of your business and give you a competitive advantage.

By “knowledge” I mean that Smart Money investors have intimate knowledge of your vertical market. Explaining your product or service will be easy because they already know the competitive landscape as well as the opportunities.

They’re familiar with your customer’s wants and needs, potential sales objections and market potential. They have a good sense of the best potential channel partners, industry analysts and probably have insights affecting customer demand that you don’t have.

Think about the hit television show SharkTank and what each of those sharks can bring to the deal when they invest. They bring a lot more than just money, and that dramatically increases your odds of success if you execute properly.

Imagine an entrepreneur with a product that’s a perfect fit for the QVC channel. What impact could Shark Lori Grenier have on that business? She could march the company into QVC studios for a meeting. Once there, she could get an infomercial produced and broadcast much faster than the entrepreneur ever could without Lori’s knowledge and relationships.

I describe how to find the right investors in the SmartMoney Playbook. It’s free, and you can grab it here.

What if the CEO’s product is technology suited for sports arenas? Shark Mark Cuban, owner of the Dallas Mavericks NBA franchise, could accelerate growth of that business. Massively. Practically overnight.

Smart Money investors make it their business to know everything they can about the industry they specialize in. Why? Because they’re investing large sums of money in companies and it’s their way of hedging the bets they place. They’re immersed in the industry. As a result, they’ve cultivated key relationships.

And relationships is the second defining characteristic of a SmartMoney investor. This means they know all the significant players in your industry, and can open valuable doors. Doors that could lead to large customers, distribution partners, analysts and Tier-1 venture capital firms for later rounds of financing.

They can even open doors to potential acquirers.

Watch this video, as I explain what SmartMoney is, and the three simple tests to know if an investor is a smart money investor or not.

As you’ll see, choosing investors is a decision that can make or break your company.

How to Find Smart Money Investors

Here are the steps in order to identify Smart Money Investors:

1. Create your own target investor list of Smart Money Investors. I explain how you can do that here. Or, if you’re short on time you can hire us to do that for you.
2. After you’ve created your initial list, it’s critical to screen investors. I describe that here.
3. Then, “work” the list.

I can help you and your team find Smart Money investors to dramatically increase your chances of success. Of course, I’m happy to tell you how to build your own target investor list, but you’ll need access to online databases similar to the ones we use. Some are relatively inexpensive but others cost thousands of dollars per month.

It’s a tremendous mistake to settle for nothing but money when fundraising. Don’t make the mistake I did early in my career. A mistake that cost us over $1.6 billion! Be sure to get the knowledge and relationships that only Smart Money investors offer to increase the odds of your businesses success.

What do you think? Does it matter who the investor is in your deal?