Investors Always Say “We Invest in Teams”
That is however only partially true. If your product doesn’t make sense, if your business fundamentals don’t seem sensible, or if you have zero history of traction in the market place, your chances of Angel or Venture funding are slim.
The Importance of The Big Idea
As the cartoon implies, there are startup entrepreneurs who seek funding for products that at first glance seem really stupid. Sometimes it’s that I don’t see the potential, but sometimes the products really are stupid.
Every startup seeking funding needs The Big Idea. The big idea is the “why” that describes to others what big problem is being solved, and it is that which people other than the founders rally around.
I attended a startup conference last Friday sponsored by CalCPA at which Ephraim Lindenbaum of Advance Ventures described this as succinctly as I’ve ever heard it.
To get funded, a startup Big Idea must fall into one of two broad categories.
- Brave New World
- Better, Faster, Cheaper
Examples of Brave New World are Uber, Airbnb, and BitCoin. All of whom are disrupting existing industries with new ways to find a ride, find a place to stay, and store and transact money.
Examples of Better, Faster, Cheaper are LinkedIn (whose primary business model is selling details about us to businesses looking for talent), Square (simplify and reduce the cost of credit card transactions), and Dropbox (who makes it easy to store and share files).
The Importance of the Management Team
I’ve heard dozens of investors make this statement, but it was Carol Sands of The Angels Forum who stated this best.
The investors have no desire or intention of running the business should you ever decide to walk away. So it’s important to them that you don’t.
They need to know that when the going gets tough (and it usually does at one point or another) the founding entrepreneurs are not going to update their resumes and find jobs, but rather will find a way to persevere.
The following words are mine, not Carol’s, but the better you project an attitude of “We will do this or die trying” the more likely you are to get funded.
The Importance of Customer or Marketplace Traction
I’ve attended dozen’s of pitch events where startup entrepreneurs are either granted meetings with potential investors or not, and in my experience if you have no customers and no revenue you are not granted a meeting. If you have a problem with this, I suggest you get over it.
No traction equals no investment.SEO Needs Link Building