You have a fantastic idea for a product or service. You have friends or colleagues willing to help you bring your product to market. You’ve even bought a killer domain name, and have dreams of becoming a fabled Unicorn. The one thing you need to make that happen? Money.
If this sounds like you, then you aren’t alone. Without solid investment, most businesses never make it off the ground. Getting that investment, however, requires a blend of technical knowledge, interpersonal skills, and hard work. Today we break down how to inspire confidence in any prospective investor, ensuring your get the capital your business needs to succeed.
Traction Versus Talk
Traditional advice tells entrepreneurs to prepare a pitch deck and deliver it in a slick manner. It’s not wrong, you will need to prepare an overview of your business and ‘pitch’ it, but that’s not really what an investor wants to see. Entrepreneur, to get academic, is a French word that roughly translates to ‘undertake something’. We prefer ‘gets things done’.
An investor is looking to see what you have done so far. Have you just made a pitch deck and nothing else? You’ll likely be shown out of the door before you can ask for the cash. Show, don’t tell!
Know Your Figures
I can’t stress this enough. Most entrepreneurs forget that in the world of investment, cash is king. Not knowing your figures is like a pilot not knowing how to fly a plane. It simply won’t take off. Prepare in advance, and prepare thoroughly. If you don’t have an aptitude for maths (and some entrepreneurs genuinely don’t), then bring somebody in who does.
Investors want Return on Investment. It’s that simple.
Know Your Path to Monetization
In the era of tech startups, investors know that the game is longer in the tooth. To get market exposure for apps or online services, you will need to fund growth in a ‘freemium’ or ‘free to market’ model.
That is fine, but you need to have a vision for how you will monetize your business. What revenue streams will you open and when will you break even? Show the roadmap, and your investor will have confidence in your vision.
Know Your Weaknesses
This one is a doozy. Investors know that entrepreneurs are human. That means you aren’t perfect. Pretending you are in a pitch for money comes across as untrustworthy to an investor. Remember, they are buying into you as much (if not more) as they are your idea.
If you aren’t great with numbers, say this, and show how you compensate for it. Show off your team and it proves that you are pragmatic. Can they trust you with their money? It all depends on how well they can trust you.
Don’t Be Afraid to Be Passionate
In the business-world, there are many contradictions. One of the most common is that you need to follow your passion, whilst simultaneously remembering that it is not personal – only business.
When it comes to startups, you can safely throw this out of the window. Of course you need to be competent, and make the best business decisions, but you should be passionate about what motivates and drives you. It is infectious, and from our experience, the number one factor that determines how confident an investor is in your venture.