Interview with Venture Capitalist George Kenney: COVID Era – Navigating Investor’s Fear

Investors are always driven by fear vs. profit. Surprised? This is true now more than ever, so learning how to overcome investor fear is key to getting funding. In this interview, George focuses on the emotional side of raising capital, teaching how to replace the fear of losing money with a comforting personal trust in the founders.

Robert S. Kramarz: Hi, this is Robert Steven Kramarz, Executive Director of Intelliversity. And this is the Vision Master podcast, where we interview vision masters like you and investors who serve them. So today, we have with us, George Kenny, co-founder of Shepherd Ventures, a very successful and long time successful venture capital firm in San Diego, California. Welcome George, how are you doing this morning?

George Kenney: Oh, thanks. Glad to be here. I appreciate it.

Robert S. Kramarz: All right, so make this quick then. What do you think private investors are really looking for, like angels and venture capitalists, when meeting founders of startup companies or young companies?

George Kenney:  I’m talking to investors all the time. And what I’ve got to tell you is that founders often think that raising money is a logical process. And my long experience is that it’s about 90% emotional and very little logic is involved. Why is this? Well, most investors, angels, and venture capitalists lose money 80 to 90% of the time and so they are extremely fearful. And the only way to overcome this fear is by emotional means.

No amount of logic is going to overcome their fear. It’s like fear of spiders, you’re not going to overcome it with logic. And so the way to overcome this fear is by selling trust, which is primarily emotion and the opposite of fear. So you can sell trust, overcome fear. If you try to sell logic, it doesn’t work. Note from Rob: This is a real pitfall that so many great innovators, CEO’s and Founder fall into.

Robert S. Kramarz: Well said. What’s the difference, any difference now in the middle of this COVID pandemic and post COVID?

George Kenney: What’s different now is that the fear or anxiety on the part of investors is even greater. Let me share with you the Fear & Greed Meter. It ranges from zero to 100. The higher the number, the better. We’re right at about 50 now, which is actually good as it is a neutral point. At the end of last year, it was near 100. And on March 23, at the pit of the market, it was down to about four. And so we’re right in the middle of this fear and greed index. And as the needle moves up, which it is, people will start opening their checkbooks again. And so we have a special, additional fear because of the market.

Robert S. Kramarz: Interesting. Since a lot of our listeners are on podcast only, you can find that fear and greed index on CNN Business and it’s in various places online. So how do you prepare founders and vision masters to do what you just said when meeting investors?

George Kenney: There are two things that we do special that you might not think about. First, is because of the fear right now, it’s only with a sense of some urgency that investors will open their checkbooks. So I have to answer the question, why should I invest now? Why don’t I wait until times get better? And it generally takes about four to six months to raise money. So you have to give the investor a reason to invest now, as opposed to delaying. This is called FOMO, the Fear of Missing Out.

So you have to generate some sort of rationale that creates an urgency for the investment. Otherwise, they’ll just wait. Second, the bigger issue is risk. I shared the fear and greed meter. The bigger issue is risk control, but we don’t really get into risk control itself because that’s a logical thing. We get into fear mitigation. How do you overcome this emotional fear? And the best way to do it is to sell trust. And we are very good at creating and helping a founder to sell trust, to overcome this emotion fear.

Robert S. Kramarz: George, very good. Thank you. I know that our founders and vision masters are going to want to get in touch with you. How do they reach you?

George Kenney: You can get ahold of me two ways. One is to go to https://startupfunding.capital, And the other is you can contact me directly. And the email is [email protected] And that’s spelled like the good shepherd, S-H-E-P-H-E-R-D, ventures.com. [email protected] Be glad to hear from you.

Robert S. Kramarz: Awesome. Also, if you want a personal introduction to George, you can contact me. Robert Steven Kramarz with Intelliversity. The email is [email protected] Or you can contact me through the connect page on the intelliversity.org website. So again, this is Roberts Stephen Kramarz of the Vision Master Podcast, and that’s the way it can be. Thank you much.

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