This post was previously written by Fleetwood Hicks and published with Forbes Magazine in 2014. Just wanted to share it with you:
When raising capital to grow your business there are a variety of ways of going about it. Friends, family, crowdfunding, banks, private investors and VC’s. Another exciting alternative, if you are lucky enough, is to acquire Celebrity Investors. Selecting the right celebrity that ties in well with your business, can add a far greater value than the equity stake they may purchase to be a part of your company.
Having investors of any kind is a big responsibility and added pressure to any startup business. You will have to answer to others on a regular basis, provide monthly reports and possibly weekly updates, which is more work, but it also helps to keep you on track and accountable.
We contacted the founding President of Villy Custom, Fleetwood Hicks, who received a $500,000 investment from Celebrity Investors Mark Cuban and Barbara Corcoran on Season 3 of ABC’s Shark Tank reality TV Show. Villy Custom is a unique bike brand that allows anyone to design their own custom bike online. After working with Cuban and Corcoran for over a year now, Fleetwood gave us 7 valid reasons to acquire Celebrity Investors…..and here they are:
1. Instantly Legitimizes your business.
You need all the advantages you can get during the early stages of growing your business. Acquiring a famous investor will put you on the map immediately. Nobody in the public eye wants to be affiliated with something that isn’t good or does not have value. A familiar name and face along with your product lets people know that you are for real. Large corporations are paying huge dollars for celebrity endorsements, having a celebrity investor is saying even more, because they are investing in YOUR business rather than being paid to endorse you. Big Difference. They are showing people they believe in you and your concept.
2. Accessibility to Key People
In today’s business environment it’s very difficult to get through to executives at big corporations. In addition to selling bikes direct to consumers, Villy Custom also works with large corporations/hotels creating custom bikes for them as rolling billboards. Access to key people is much easier when the call comes from Villy Custom - a Mark Cuban/Barbara Corcoran company. By and large, most people at a major corporation may not know much about a startup, such as Villy Custom, but most have heard of Mark Cuban. The odds of that call making it through to the decisionmaker are much better. In sales, it’s always a numbers game and the more people you can reach, the more sales you can make.
3. Their Rolodex is Bigger and Better Than Yours
Most Celebrities know other celebrities and VIP’s in other business industries. They run in the same circles and typically can get in contact with one another much easier than us “commoners”.
Example: Fleetwood was mentioning that Villy Custom was interested in approaching Zappos about producing some custom beachcruisers to offer on zappos.com. Why not go to the top and try and speak with a visionary like Tony Hsieh (Zappos CEO – who is famous himself)? Through Barbara Corcoran he was able to make immediate contact with Tony’s assistant due to a recent entrepreneurial event they had both attended in NYC.
Most celebrity investors have the contacts you need, you just have to offer a good reason to approach them and more than likely they can make it happen for you.
4. Advice & Support on Big Decisions
There’s no such thing as an overnight sensation. Most celebrities worked hard to get where they are today so they will bring lots of experience on how to succeed. In Villy Custom’s case, both Mark Cuban (How to Win at the Sport of Business) and Barbara Corcoran (Shark Tales) have written amazing books, given speeches and worked with a large number of other startup entrepreneurs, so it’s another ace in the hole. This doesn’t mean your Celebrity Investor is going to be so involved that they are going to steer your every direction, but it is another great resource that they can and will provide when needed.
5. Big Edge with Social Media
Of course you can always pay for marketing, but a well-followed celebrity investor can generate immediate buzz for your Brand. Over the past few years, Social Media has become one of the most important building blocks for brand identity and sales growth for most startups. When Villy Custom has a one day sale or a new product launch, a Mark Cuban tweet can reach almost 2 million potential consumers with a few strokes of the keyboard. Imagine if you were lucky enough to have Lady Gaga jump on board (she currently has 19 million followers).
6. Added Perks and Notoriety for Your Business
There’s a big annual St. Patricks Day parade in Dallas, Texas that was started almost 30 years ago. When a major financial sponsor pulled out at the last minute in 2012, Mark Cuban (who is from Dallas) donated the necessary funding to keep the St. Patrick’s Day parade from being shut down. Appreciating the gesture, the Parade Committee allowed Villy Custom (also a Dallas based company) to lead the parade. The parade has a crowd of just over 100,000 people, so, it was an opportunity for Villy Custom to showcase their bikes to all of those people at no cost. Fleetwood also mentioned that he’s been invited to attend several entrepreneurial seminars that were co-hosted by Barbara Corcoran in NYC, highlighted by a visit to her personal beach house in Fire Island for a 3 day retreat with other Shark Tank entrepreneurs. An incredible time and valuable learning experience.
7. Attract Other Key Partners
Growing your business will require you to work with other companies. Whether it’s social media, marketing, SEO, shipping or anything else, it’s much easier to negotiate a favorable partnership with an entity that has added incentive to work with your company. Aligning yourself with someone famous will attract other companies that want to jump in with you. They understand that you will receive a greater amount of media attention and that if they do a phenomenal job, they will have the possibility of being mentioned in addition to hopefully attracting the attention of the celebrity investor so that perhaps they can expand their business even further. Over the past year Villy Custom has been able to leverage their celebrity relationship with several vendors that had a real interest in getting on board with Cuban Companies and The Corcoran Group.
When considering investor types, finding the right Celebrity Investor/Investors can be extremely lucrative for your startup. Not only will you receive investment dollars you need to grow the business, but you will also receive a mix of other intangibles that will set you apart from the competition at little or no additional cost. Good luck with Lady Gaga!