As the authors state early on in Attracting Investors, raising capital, especially for entrepreneurs, is more a marketing function than a financial one. Investors have to be sold a value proposition just like P&G sells toothpaste to consumers.
Why marketing? Because thanks to globalization and technology, capital providers have almost limitless opportunities to invest. Entrepreneurs must create a marketing program that targets select potential investors and promises not the highest growth return, but rather the highest risk-adjusted return on capital.
But not all investors are created equal, so this book outlines different strategies for different types of investors: early-stage angels, private equity investors, and more traditional financial institutions such as—gasp—banks. Whereas an angel might base a lot of the investment decision on his or her confidence in the entrepreneur, and the seasoned VC is looking for a sound management team, the bank wants collateral and a capacity to repay.
In the end, the answer is not to knock on every possible door for funding. Marketing helps create a disciplined approach to finding the right sources of capital. "Once you understand how different types of investors and lenders think, you can identify your business's best prospects and make your best case for financial assistance," the authors say.
The final chapters present basic marketing tools for attracting and keeping investors such as segmenting, targeting, positioning, differentiation, relationship selling, and branding. Who knew Marketing 101 would help you fund your company?
This book is not just for entrepreneurs, according to the authors. Any business that needs to develop new sources of financing should adopt a marketing perspective.
The authors bring cross-discipline expertise to the table. Kotler, on the faculty at Northwestern University's Kellogg School of Management, is a well-known marketing guru, Kartajaya is a marketing consultant, and Young is a professor of accounting at INSEAD. —Sean Silverthorne