How to get investment
Here are some things to consider when you are looking for investment for your awesome idea. A top 7 list that will get you on your way. Good luck!
It’s the everlasting burden for every startup to get investment. This could be for either building the product or scale it. Either way money is needed to do anything. In Europe the challenge is that investments are usually small and unambitious. Being in a startup feels more like participating in a relay race than starting a company. In the US investment are more likely to flow like a beautiful money river and this will keep the entrepreneurs happy and scaling the team and go-to-market is easier.
If you feel more like a relay athlete than an entrepreneur then this is very normal. Don’t be surprised and don’t be discouraged. Keep running.
So how do you win the lottery. There are many clever people who have suggested a lot of things when it comes to getting cash. A quick “How to get investment”-search on Google shows 611.000.000 results so it’s fair to say that this is a populair topic.
You have to stand out from the crowd and follow some simple steps and you can get the reward. Imagine the entrepreneurs at “RectumTech” if they simple say: “We are different. We are not like our competitors. We go deeper.”. It issimple not enough.
Let’s look into some do’s and don’ts when you lure investors into the den.
The list is based on a recent survey by CPHFTW. They asked investors what would make them skip out on an investment. I added two of my own to the top 5 and explained the thought behind the titles.
Founders are unlikable or dishonest. It’s a well known fact that investors invest in people. This is the most important aspect when trying your luck on the venture market. If you have a bad personallity or some parts of your personal story doesn’t seem right then the early seed investment will be jeopardized. There is a reason why proffesional dancers are told over and over again to SMILE when they are participating in competitions. A good personality is 50% of the magic when dancing and it is the same when selling your soul to investors.
Outsourced core competencies. This is always a difficult balance. What can you outsource and what do you need to do yourself. If you are a startup carpenter it would be unwise if you outsource your planing to a carpenter next door. It would be expected of your to do your own planing. Good outsourcing would be to send invoicing and tax calculation to an expert. Website design would also be a brilliant idea to send to a design firm.
Founding team owns <90% How much blood founders donated to achieve their goals. This shows a few things about the founders. a) how soft are the founders b) do they have the ability to bootstrap c) how many parties are involved in the company. If too many it can be a complex afair to run the company and the potential invesors might not invest.
Not understanding the market. A typical mistake made by first time startups is the statement “We only need 1% of the entire market then glory”. This line is heard too many times and criying it out very loud with waving arms would properbly make the investors stand up with the words “Don’t call us — we call you.” Battle lost. Go deep into the market and how it is build. Look at how competiros do it and see if it possible to twist it a bit to make it more juicy.
Not wanting to solve real problems. This is up to debate. How do you define real problems from trivial? Defining a real problem for our carpenter would be if the planing chips piled up and obstructed his work so speed and quality was effected. Action should be taken on the logistic side to work out a solution to get rid of it. Trivial problems would be that the food in the cantina was served cold every day ☺
Bad performance — bad pitch. Pitching is like acting on Broadway - pure showmanship. It’s all about how you deliver the story. How much passion and drive you have and how unsecure you feel when you deliver. No one will believe that you will be the next Facebook-killer if you can’t communicate your message.
Competitors? No we don’t have any. Some startups don’t admit or acknowledge that there are serious competitors on the market. Investors knows that it can’t be true if a startup states “We are the only one making sparkling water with added lime” or “Tinder? No we are not aware of any dating service with a swipe function”.
Thank you and peace
Salem Nabulsi Buur