Kim: I don't care what you hear but investors want to invest
in a business that has a good chance to succeed. I represent VCs and high net
worth investors who cringe at terms like "high potential"
start-ups. My clients begin with the understanding that most startups fail. If
you want their money convince them that you are the exception. You need to have
a very good handle on your costs and cash flow. You need to be able to explain,
in detail, what you will do with investors' money. A proposal that says
"marketing" - $100,000", does not tell investors how you will
spend their money. Let me say it again, details. Likewise, a
statement "I will hire a marketing person" is worth less than,
"I have a marketing person on board, here is their resume and this is the
marketing plan and budget they developed." If you tell investors
that you intend to sell 50,000 units the first year, be ready to tell them why
you think this number is reasonable. And by all means, know your competition,
who they are, what they are selling and to whom, and , what it costs. If you
can hire salespeople away from a competitor who is already calling on potential
customers, so much the better. Convince investors that you know the
business you are entering "cold"and convince them that you can make
the tough decisions that are necessary to make it work. If you focus on the
"holistic" nature of your team and how well they work together, be
ready for the question "Are you prepared to fire one of your team if the
need arises? "
One of the biggest things a founder can do to become more investment-ready is to learn to "think like an investor." Put aside your feelings about how great your solution is and ask yourself the question: "If I were an investor, would I put my money into this business?"
Investors want a business to have enough critical mass in its business model, market strategy, competitive position, etc. Take my free Minimum Fundable Company Test at www.mfctest.com to get an idea if you are ready to present to investors.
Finally, always focus on the key question investors have in mind: "What's in it for me?" If you cannot give a good answer to this, investors won't be interested.