Seven secrets to getting the startup bucks you need
Ever wonder why some startups get investment capital while others struggle, fade and disappear?
Of course, the primary reasons entrepreneurs do well is because they have a solid product, a strong management team, and a hungry market they can prove exists.
But there are also instances where the product/service is good but because of the founders’ behavior or inability to explain his company, the start-up doesn’t get funding and never gets off the ground.
I spent several years with a company that matched high potential entrepreneurs with private “angel” investors. Many entrepreneurs got funding while others failed despite a valid concept. What made the difference? Here’s my take on it.
The most important task for an entrepreneur is to be able to clearly explain to investors (banks, angels, friends), what their company does and how investors will get a reasonable return on their money.
This sounds simple – but it’s not easy, and many people fail. Keep these points in mind:
- People invest in people they like and trust. They always have. They probably always will.
- Be approachable. Shake hands, have good eye contact, and smile. So simple. So powerful…and so often overlooked. It will make a difference.
- Look in the mirror. You are your business. How do you present yourself? Your dress, your demeanor. Would you invest in this person? What changes would you make?
- Be very clear about what your company does – no jargon, no techno-speak. You will not impress them with jargon; you’ll confuse them. Speak English and don’t talk too much.
- Listen. Talking to investors is a dialogue not a monologue. Potential investors want facts about your company but they want to know you too…to decide if they believe in you. They also want you to hear their concerns and questions. Answer them and wait for more.
- Provide objective data that proves you have a viable market with growth potential. If you were presented with this data, would you want to invest?
- Always put yourself in your investors’ shoes.
- What would you want to know about your company before you forked over your money?
- How would you like to be treated?
- How would it feel to listen to someone and not understand a word they’re saying? Answer: they feel stupid and you don’t get an investment.
If you keep these points in mind I guarantee you will be more likely to get an investment or at least sustained interest in your company.
And remember, angel investors can provide “smart capital.” They are often cashed-out entrepreneurs interested in your business because they were in a similar business. They can provide you cash but they can also provide connections and advice as a member of your board or as a C-level executive in the early stages of your company. Don’t be afraid to get help from others. I could go on about this – but that’s a topic for another article. Stay tuned.