Raise Money For Your Business by Heeding Lessons from an FBI Hostage Negotiator

Looking for money for your business?

Well, you may want to take some advice from an FBI hostage negotiator.

That’s right. I recently came across an article detailing the chronicles of a former FBI hostage negotiator, and noticed several parallels between hostage negotiations and raising money.

Here are the key lessons and parallels:

1. Determine what is a negotiable situation and what is not

In the infamous 1993 Waco, TX negotiations, it was determined that leader David Koresh would not negotiate and that the only way to save lives was via raiding the compound.

When raising money, you’ll learn that some investors are interested in your venture, and others aren’t. You generally are going to have a really tough time changing the minds of investors who initially are not interested in you. So when this is the case, move on.

2. Everyone on your team who communicates to the other side is a negotiator

This is a really interesting point. If any FBI agent communicates with the other side (even if it’s not the leader of the FBI team), it is treated by the other side as an official communication. As you can imagine, lots can go wrong here.

Likewise with raising money. If you have a team, investors will surely ask questions to the other team members. Make sure you are all on the same page and have the same vision and answers to key questions.

3. What the other side sees is key

In Waco, TX, the FBI agents said they wanted to peacefully negotiate. But when David Koresh looked out the window, he saw tanks. Clearly, this visual didn’t match the message the FBI was trying to send him.

The same holds true when raising money, you need to match and support your claims. If you say that customers are going to love your solution, provide testimonials from prospective customers. If you say that you’re going to progress your company week after week, then make sure to follow up with investors every week after your initial meeting to keep them aware of your progress (and actually make real progress).

4. Keep it Simple

Years ago, during an airplane hijacking, FBI agents were concerned about the fact that the hijacker was wearing a long coat. They guessed that a bomb was being hidden under it, and started thinking of complex solutions. Later the hijacker revealed “It was cold and it is the only coat I own.” (pretty funny, huh)

Likewise, when raising money, keep it simple. Investors can’t invest in what they don’t understand. Lay down the key facts about your venture — why it’s unique and why it will make investors money. You don’t need to get into all the tiny details unless they specifically ask about them.

5. Listen to the Other Side’s Needs

In virtually all hostage situations, the ‘bad guys’ have specific needs. Maybe it’s money. Maybe it’s power. Maybe it’s the release of a prisoner. Etc.

Likewise, all investors have needs. Venture capitalists are typically driven by an ROI need, or a need to get a high return on their investment. Angel investors also have other needs like ego and interest in helping an entrepreneur. And strategic investors may invest out of fear that their competitor invests in your company before them. And so on.

So, take the time to understand the needs of your prospective investors, and sell into them.

I trust that these lessons will help you raise money for your business. But realize, they’ll only help you after you take the first steps….mainly getting in touch with potential investors and securing meetings.

 

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As I explain when you click, the key is to start at the bottom and work your way up the Funding Pyramid.

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