EP236: The Art of Raising More Money

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We have a question for a few of you. Imagine that we’re exploring additional investment opportunities to diversify our portfolio. We’ve examined various projects and are in discussions with several potential partners. Melinda, tell us, why should we invest with you or in your project?

Melinda might respond, “Our project offers exceptional ROI and is situated in a high-growth area. We stand behind our investors, ensuring transparency and regular updates.”

“Okay, Dan, same question. we’re seeking opportunities that align with our financial goals. What makes your real estate venture or business worth our investment?”

Dan could say, “I’d like to understand your investment criteria better. What specific returns are you looking for, and what has prompted your interest in expanding your portfolio now?”

Moving on to Sharon, “Considering the variety of opportunities we’re exploring, convince us of the value your investment brings over others.”

Sharon might answer, “Our company’s strength lies in our unique approach to the market and the comprehensive support we provide to our investors.”

From these three “perspectives” what should be clear to you all is that differentiation isn’t just about having the best project but how well it aligns with investor goals and the unique value each investment can offer, compared to your competitors.

Raising more money is about change and perceived value. Whether investors seek to grow their wealth, diversify their risk, or achieve specific financial goals, it all boils down to how effectively you can communicate that investing with you is far less risky than missing out.

In today’s episode, we will cover three critical steps to becoming a recession-proof investment opportunity:

First, we’d like you to picture and imagine you’re at a weekend market browsing through stalls when you come across a booth selling high-quality, artisanal coffee beans. The seller, noticing your interest, offers you a deal: You can either take a guaranteed $5 discount on any coffee bean package you choose or participate in a coin toss where heads mean you get a $10 discount but tails mean no discount at all.

Despite the coin toss offering a chance for a higher discount, you find yourself leaning toward the guaranteed $5 discount. This decision is a classic example of loss aversion theory in action. 

The theory, proposed by Daniel Kahneman and Amos Tversky, suggests that the pain of losing is psychologically about twice as powerful as the pleasure of gaining. In this scenario, the potential joy of saving $10 doesn’t outweigh the fear of losing the opportunity to save $5. Even though the expected value of the coin toss (a 50% chance of saving $10) is mathematically equal to the guaranteed discount, the aversion to losing certain savings drives you to choose the safer, guaranteed discount. 

How does this translate to your investors?

Think of it this way: investors, whether they’re big-shot venture capitalists or your average Joe looking to make a smart move with their savings, all come with their own set of desires and nightmares. Some are chasing the thrill of a big win, others are more about keeping their nest egg safe, and then there are those looking to make a difference with their dollars. It’s all about decoding these desires.

Here’s where it gets interesting. In investing or anything else people hate losing more than they love winning? That’s ‘loss aversion’ for you. 

Show them not just the shiny potential of what they could win but also how you’re going to protect them from the downside. That’s the real conversation starter.

Communication: Keep It Real

When it comes to talking to investors, ditch the fluff. Tailor your pitch to their world, not yours. Got a conservative investor? Highlight the stability and proven track record of your deal. Facing a forward-thinker excited by the next big thing? Show them the groundbreaking potential of your project. It’s about making your message hit home by aligning it perfectly with their outlook.

Your Unique Value Proposition: What’s the Deal Worth?

Alright, let’s get into the meat of it – your Unique Value Proposition (UVP). This isn’t about dumping data and features on them. It’s about spelling out clearly and compellingly why your deal is the missing piece in their investment puzzle. Start by sizing up the market and your competition like a pro. 

What makes your offer stand out? Is it the location, the innovation, or the kind of returns that make people sit up and listen? That’s your ace.

But here’s the clincher – focus on what this means for them. How does it benefit their portfolio or meet their personal goals? Whether it’s delivering returns that beat the market, providing a safe haven for their investment, or offering growth potential, make sure your UVP answers the big question on their mind: “What’s in it for me?”

Pitching Like a Pro: Storytelling Meets Data

When you pitch, think of it as storytelling with a backbone of solid data. Use stories to connect emotionally, sharing the vision and journey of your investment. But back it up with hard evidence that speaks to the logical side of their brain.

This one-two punch of emotional engagement and factual proof is what turns interest into commitment.

Mastering the Art of the Question

Now, onto the art of asking the right questions at the right times – this is where the magic happens. Ditch the yes/no interrogations. Opt for open-ended questions that get them talking about their investment dreams and fears. 

This isn’t just chit-chat; it’s strategic conversation that lets you tailor your pitch in real-time, hitting all the right notes.

But don’t just talk; listen. Active listening is your best tool for building trust and understanding. 

It’s about really hearing them and then pivoting your strategy based on what you learn. This dance of talk, listen, and adapt is what can seal the deal, transforming a good pitch into a great investment!

Now that you have mastered the art of raising more money, tune into this episode to make sure that you don’t make the 3 Biggest Mistakes Real Estate Investors Make! 👀