Startup is the trendy business word of the decade. With so many startups rising (and falling), it is no wonder that the Internet is full of articles on the trends and pitfalls of this industry. If you are reading this article, you are probably planning a career in entrepreneurship, or you’re already a co-founder of the potential next big thing. Now, the only thing that separates you from success is a capital injection.
However, despite the willingness of many venture capitalist funds and angel investors to lend money to startup businesses, you still have a long way ahead before convincing anyone they should spend their time and money on you. Any ambitious founder will give the best presentation for what he thinks will win the hearts and minds of investors. However, if you are an absolute beginner, you are probably not really aware of how investors really think. Most people believe it is all about return on investment: show them how you plan on making a lot of money and you are in. Yes, that is partially correct, however a lot of great business ideas failed because of bad execution, and any experienced investor knows that, too. That is why there are a lot of other things you can do to impress them. Here is a list of 5 things many entrepreneurs fail to realize that really leaves investors confident you are the right pick.
1. Investors Love Prototypes
Investors like something they can visualise and touch. Give them something to think about with a prototype of your product. A prototype is actually not that easy to make, this is why it can impress a lot of the right people. Not only does it demonstrate how serious you are, but actually by creating a presentable prototype you’ll show you have done your homework in terms of market research, user interface, technical requirements and so on.
If you do not come from a technical background, there is a wide range of software that can help you create prototypes on your own. Whether it is a website or an app, there is a great palette of free tools you can use. For instance, a couple of great options are InVision, Marvel, and Wireframe.cc. InVision is more for the design savvy who know their way around Photoshop and Illustrator, while the other two can help you draw your way out. All apps are great for team collaboration so you can easily share your product interface design with your cofounders, even remotely.
2. Your A Team
With the startup craze of this decade, anyone with an idea believes himself to be an entrepreneur who could make millions if only he had the capital to push his idea through.
People push ideas, not money, and if you do not have a good team of dedicated people, you will probably fail to convince anyone. Some of the more common questions from investors after listening to a pitch are: who comprises the team, what are your qualifications, and is this just a fun side thing for you or are you fully invested? They want to know how risky this is for you, and if the startup fails, what effect it will have on you.
A common thing to see among teams is homogeneity; founders are either from a technical background or a business background, which might create problems later on. If you have a fully invested team from different backgrounds, do not be afraid to boast it. It just shows that each one of you can contribute differently to your enterprise’s success.
3. Show Me The Money
We have all heard of the large sums of money some startups get after a round of investments. However, in practice, there are a lot of great businesses that get a lot less capital. We do not hear about it on the news because the numbers are not as shocking, but they are still significant for a startup whose founder knows what they’re doing and how much they need. Do not expect your potential investors to know how much money to invest in you, give them an approximate sum. Show them you did your calculations, and how they can help you create a great service.
Make a business plan, think what direction your business will go in and why. Visualize the big picture, where you want to be in one year, in 3 and 5 years time. Think about how much money your business needs to make, think about how your customer will change, and generally where the industry is going. After doing this, it will be easier for you to calculate the resources needed to satisfy customer demand, product development, marketing and even your own pay.
4. Research, research, research.
Extensive research never killed nobody, while the lack of it can kill all your dreams and efforts of getting funded. Creating products people want is the key to business success, however that is much easier said than done, and investors do know that. This is why they expect from you to do your homework, know who your customer is, and show them why they need your solution precisely. Use tools like MakeMyPersona or Xtensio to visualize your customers. Another thing you can do to impress is show industry trends and statistics. Use PDF to Excel converter to extract valuable statistics from large PDF reports in minutes and create convincing graphs in Excel.
Remember, people are visual beings, so don’t let all that research effort go unnoticed by just explaining your figures, visualize them!
5. Practice makes perfect
Lastly, chances are you will not get funded the first time you ever present a pitch in front of an audience. However, neither did many successful entrepreneurs of today. Have in mind that every failed pitch is actually learning in disguise. After a couple of failures, you will start noticing patterns, what investors want to know, how long it takes you to get the point across and much more. These will help you perfect your pitch for that special day when you do impress your audience and convince them you really are the right pick for them.