What’s That Investor Bringing?
Knowledge, Contacts and Capital
We’re tightening up the MiniCorp game at the moment. Discussing our approach with investors with the proposed outcome of: they will value our process, see the potential and back the startups we’re working with if the fit is right.
We’re framing that conversation right. The people that we work with might only have a small chunk of capital behind them and their idea. It’s crucially important for them to understand what game an investor might bring for them. Here’s what I’m seeing from the pre-seed to seed value prop:
The Contacts
The investor will have a network of people who they’ve done business with in the past. They trust them and have built a track record together.
You as a startup working with that investor, you now have access to those contacts. That’s pretty huge. Instead of calling a company, getting in on the ground and spending the time/effort to get something done, the door can be opened at the top and the task speedily moved along.
You’ll start having conversations with people who get shit done and your network increased because of it. A new room of like minded people and your our circle of effective people has grown. Substantially.
The network is often many people deep. Although the investor may not be directly connected with someone you need to talk to, chances are one of there contacts will be.
This greatly improves the speed of progress for the company.
Knowledge and Advice
A seasoned investor is worth her wait in salt. She will take an advisory or mentor role with her investment to help unlock your ideas potential.
Take it with both arms and listen to it. I’ve personally always been of the opinion to listen to absolutely everyone’s advice. Compile it together with market data and make both educated and gut decision.
The investor should be seen as one of the team. Rather than having to raise the capital to go and hire that surreal finance director, you have direct access to this seasoned business lady who can push you forward through her knowledge and advice.
Side note: It should only be interrupted as advice. It is your company and your vision. Heated debates and challenges are always welcomed, they keep you on your toes. But you drive the direction of the car, not the investor. That’s why they’ve taken the investor role and you’ve taken the founder one.
Capital and Cash Flow
Oh my dear old friend capital. This can mean so many different things for different people.
Do NOT take finical investment unless you absolutely need it.
You have a business. It’s purpose is to sell a product for more than it cost to make or buy. You should be hitting revenue as soon as possible. It’s the objective.
Where a capital investment works is with time.
If you see a large opportunity for your company right now but are unable to run for it due to cash flow restrictions, investment might work.
If you are seeing phenomenal growth and need to scale the team to convert it. Investment might again work.
If you need to hire that excellent operations lady to drive that department forward and other high profile hires. Investment might help.
Bank Loan or Investment
If you remove the contacts and knowledge section out of this article, you don’t need an investor. You need a bank loan.
This is why you need to throughly vet, run your due diligence and ensure that the investor, that lady taking capital in your firm, sits like a snug jigsaw piece within the company vision.
