When you should look for an Investor.
A lot have asked me when a startup should start looking for investors and my advice is, start when you know you have a good, scalable process and demand for your product/services. Why will an investor invest in you when you have not even made 1 sale? It happen in some cases but don’t always plan on this from Day 1.
You need to learn some basic skills which will come along while running your startup. You will make initial mistakes and correct them. You will spend in the wrong places and use the wrong processes but in all, just ensure you have smooth operations.
Don’t forget that if investors invest in you very early in your startup, they will ask for a very large equity in your business. Any investor that takes 51% of your startup is ultimately the owner of that business and you do not have control anymore.
If investors see that on your own, you have been able to scale your business from point A to Point B to Point C, they can have confidence in their investment knowing that investing in you at Point C means when you are at Point P, their investment would have matured. And don’t forget that you have more power of negotiation when your business already has traction.
Reporting
So many startup founders don’t have well-defined business plans and KPIs. For some, it’s at the point of invitation to pitch that they scribble down something and believe that’s a business plan.
A business plan is detailed and from a glance, we can know what your company is all about, your vision, where your company targets to be in 5 years’ time etc. I encourage all startups to try to have a Business Model Canvass even if they don’t have a well-developed business plan. A BMC can easily help to analyse your business and also put you and your team in focus.
Business Model Canvass explained
Now talking about reporting, as a founder, your reports should be part of your life. It should let you know how well your business is growing, what verticals you are performing well and the ones you need to work on.
I have asked a couple of founders what they track in their reporting and it’s been Alexa Ranking and total site visit. While that is very good, there are very important metrics to track and this depends on the nature of the business you are into.
A potential investor once asked an e-Commerce founder how many rejected orders he has recorded in the past 6 months and there was no record of that.
Why are many startups are failing without the investor funds?
I will like to throw this section open for discussion. How many months should a founder plan for to use his funds to run the business?
I will throw more light on this if you request that but for now, let’s leave it up for discussion. Let me know what you think in the comments section below. Thanks #1000000EntreprenuersInNigeria
This is my first article on medium and i would love to celebrate it with some people I have always followed to gain a good sources of inspirations and has better shaped me in one way or another.. My special recognition goes to the following persons: Yann Girard
Marc Andreessen Shena Garg Hillary Clinton Paul Graham Julie Zhuo to mention a few
