Just about a year ago, Satya Patel posted a piece which I recently reread about raising money. His thesis, namely that making your audience really believe, is the key dynamic in raising funds. Among his main points, Patel points to the fact that emotion is a major factor for investing VC’s, and that emotional connection to a product, service or team can many times be what attracts their attention. This “emotional resonance” as Patel puts it, is what creates the belief; not only in VC’s, but I would venture so far to say in customers as well.
Emotional resonance is a human calculation. Despite the fact that some people like to think that they can “program” and predict the emotions and reactions of others, this is rarely (if ever) true. Humans are the very definition of unpredictable, and to think that you can “game” someone’s reactions is pure hubris.
Community Is the Angel of Loyalty and Second Chances
Patel’s post examines the “emotional resonance” dynamic from three angles within the context of fundraising, particularly at the seed level. The first, and by far most important of these, is the people angle. People are what your company is made up of, and what you build your community around.
Belief in a company’s prospects in the end comes down to the people running it and building it. It comes down to how they see (or don’t see) themselves and their customers. Community is the angel of loyalty and second chances; when something goes wrong (and many, many things inevitably will), community is the thing that will keep your wheels turning long enough to get past the potholes.
Arguably the best investment any team and/or company can make is in the development of their communal dynamics. In people-based industries like music, media, social, messaging, and even news, if your community sucks, you’re dead (Ello seems to come to mind here). When you’ve built a community that rallies around your team and your product/service, people take note, and it’s a lot easier to make them believe. Dynamic, loyal communities of people are magnetic, and groups of disengaged, fly-by-night users are not, it’s that simple. Be magnetic. Be so magnetic that people can’t stand not to be around you.
Potential Is a Human Calculation
The second point which Patel brings up is potential. Potential is a little more intricate because it’s based so much on the people factor. As per Patel’s argument, make VC’s (or anybody) feel that they need to be a part of the problem you’re solving. This in effect is an extension of the first point, as it’s a similar human calculation, understanding what types of things the VC/person identifies with. How do they see themselves outside the office, and what excites them? Identify the VC’s who will look at your company and get that fire in their belly. In the case of music, for example, find those people who are true fans. The ones who go to concerts, make musical analogies, and wanted to be rock stars at some point in their lives. Find the people who speak your language, that’s the real potential. Some people call this “targeting” but I just think of it as “who do I want to go to a concert with and introduce to the band afterwards.”
Proof and Magnetism
Proof is the last thing Patel brings up. He notes that as an early stage company you won’t have it anyway, so just accept that and move on. Proof is demonstrated by belief. Belief is exhibited less by numbers and more by people and emotional resonance. It’s a calculation that even if the numbers don’t look good, that person or team can figure out a way out of the quagmire. Magnetism is the child of positivity, vision, and tenacity. It is so attractive precisely because it creates in people’s minds a sort of fabricated exclusivity; a feeling that if they’re not the ones to surround you then it will be someone else, and that in itself is an attractive trait. Be stupidly magnetic, the rest will follow.