As an entrepreneur, your primary focus is on the success of your business because your entire livelihood depends on it. But what happens when you’re ready to scale and you need investors?
If you’re hoping to bring in venture capital, you’ll have to be prepared to prove that your business can generate significant returns on investment, and that can only happen with the help of a solid team of employees.
Learn how to build a team of all-stars to attract top investors from this entrepreneur expert and get started building your dream company today.
1. What does an Investor Wants
Investors are not on your side. They are looking for ways you’ll screw up and will be happy if you do because then they can swoop in and get your company for less money. They would want to know what your business does, how it makes money, and why it’s worth their investing their dollars.
They would want to know who you are, what makes you qualified to run a business, how long you have been doing it, and why they should trust that you won’t just squander their investment away. And finally, they need reassurance that there is an exit strategy: an acquisition or IPO that will make them lots of money when all is said and done.
2. What Makes a Great Pitch?
Presenting your idea, product or service well is essential if you want investors to take notice. A great pitch can seal the deal; it’s an opportunity for you and your team to really try and impress potential investors.
Being prepared, thinking on your feet, and knowing what information investors need from you are crucial and vital. You and your team needs to work harder, reason together in order to show them that you know what you are doing and to well convince them to invest their money with you.
3. Should I just quit my job and take my business full-time?
So, now you’re ready to quit your job and take your business full-time. Great! But, before you make that leap, there are some steps you need to take in order to maximize your chances at success.
Here are five things you should do before quitting your job
- Make sure your business is profitable: Before leaving your job, it’s important to ensure that you have enough cash flow coming into your business to support yourself while working on it full-time. You don’t want to be stuck scrambling for clients or running out of money because you didn’t plan ahead.
- Get rid of debt: If you still have student loans or other debts hanging over your head, now is not the time to leave your job. You will want all available cash going towards paying off any debt so that when you start earning an income from your business, all money can go back into growing it rather than paying off bills.
- Save some cash for emergency purpose: No matter how confident you are about your new venture, it’s never a bad idea to save up some emergency funds just in case something goes wrong. In addition to covering three months worth of living expenses, consider saving up additional money for marketing and advertising costs as well as unexpected costs like replacing equipment if something breaks down unexpectedly.
- Have a solid network of contacts: When starting your own business, you will likely find yourself depending on people more than ever. It’s crucial to have a solid network of contacts that can help you with everything from introductions to potential investors and partners to providing feedback on early versions of products or services.
- Have multiple sources of income: While having one source of income is great, having multiple sources is even better—especially once you leave your job behind.
4. What if I have no technical skills, can I still get funding?
Usually, you need at least some technical skills, though not necessarily deep experience in building applications. Some startup ideas just have so much potential that they can attract funding even with a nontechnical founder.
So if you don’t have any coding skills, look for one cofounder who does and try to get an investor who is willing to take both of you as cofounders or be your mentor/investor. However, having a technical cofounder will make it easier for you to build your product because he or she will help create wireframes, mockups, and prototypes.
He or she will also be able to guide you through implementation issues when they arise. A good technical person will also help raise money by showing investors that he or she has what it takes to build your product.
And finally, a technical cofounder might actually increase your chances of getting funded (though there are exceptions). For example, if Alextech was founded by two nontechnical people, but Brian John had previously built another company called Airbed & Breakfast that helped him convince investors that he could build something great again. You should choose a cofounder based on his or her ability to work well with you and complement your skills.
5. What if I don’t know anyone who knows an investor?
It’s easy to feel like you have no connections in Silicon Valley, but most people do. It’s just that some people may be a little too shy to ask for favors, or they might not want to risk burning bridges with their network.
For these people, you can use Linkedin as your own personal network, friends and family to make connections and reach out with introductions. If you’re worried about coming off as pushy, don’t: The worst disappointment is when someone says no. But if you don’t ask, you won’t know! (It also helps to remember that everyone else is trying to meet investors, too.)
The people you surround yourself with directly impact your success as an entrepreneur. If you want top investors, then it’s vital that you build a high-performing team and engage with your network.
And remember: It’s not about what you know; it’s about whom you know. So get out there and start building relationships today. Stay connected with us by following our Facebook page.