You need an investor but does the investor need you?
When it comes to pitching an idea to investors, I too often see people thinking they are “the special ones”, “the next big idea”, “the next Uber” or “the next Facebook” to invest on. They believe it is them who take all the risks and chances, and more often than not, can’t hear NO for an answer. They feel entitled to be heard and be treated gently. Yes, it is true that investors need startups and are keen on finding great ideas, but at the end of the day, with so many startups popping on every corner, they have tones of new companies to choose from, and probably, at this exact moment, a hand full of people in the world are having the exact same idea for a startup. So the question arises: Why would investors choose you among so many others? What makes you so special? Why will they give you THEIR money?
One of the most common mistakes young entrepreneurs make when presenting a new idea to an investor is to expect positive feedback and taps on their shoulders. They have been working on this idea for so long, they forget it has flaws and problems, especially at its initial phase. They forget investors are very experienced and have heard tons of ideas already. And then, when the investor points out potential issues, they get upset and think its sabotage, because their idea is absolutely flawless, because the investor doesn’t know the market or because the investor doesn’t understand them or their idea.
Please understand that this mindset is a no-no when it comes to getting funded. Investors are looking for people who can defend their ideas with an open mind. Future CEOs who can argue smartly and accept criticism, for investors need partners, not simple idea advocates. Ideas are worth nothing! Everyone has ideas. Execution, passion, and dedication are the key. Remember this: you have the right to present an idea to investors just as much as they have the right to say no to you. Simple as that. Whenever, wherever and however they want. After all, it’s their money you’re asking for.
I totally understand founders take big risks when they decide to go all in on their startups (been there, done that). I know they could be working on a big company and making the big bucks with fewer worries. But the reality is that YOU decided to go on with that plan, you control the real future of your company, it’s all up to you to make it succeed. Money is just a means to an end. It can be invested in your idea or someone else’s. Investors take the high risk of believing in YOU, in your idea and in your capability to turn it into a profitable business. So you are the one who has to convince them, you are the one who has to step down from your high horse and understand their concerns, their needs and the value you can bring to them.
People make ideas grow and not the other way around. I repeat, PEOPLE make ideas grow! You have to be great, extraordinary and committed to make your idea a success. It’s not the successful idea that will make you great. If you want to be successful on something, be your fucking best and give more than your best every damn day. Eventually, this will be clear for anyone who sees you or your business, also for investors, who want people that can execute, work hard, get involved, work hard again, and not someone who’s just opening a basket to put cash in. Show yourself as an asset and don’t be afraid to hear no, if you’re committed, yes will show up. If you are smart, no, will make you better.
If you want someone else’s bucks, get ready to show them how they will get those bucks back, at the shortest time frame possible or in the most convenient way for THEM. Make sure you know your costs and your expenses. How much will everything cost? How will you spend “their” money? How will you make yourself be heard in the middle of the noise? This is an essential part of the deal and it will be so important along the way, that it will decide if you survive or not. Profitability makes businesses work. Don’t forget that.
As my last point, I would like to add that presenting your idea as “the new Facebook”, “the new Airbnb”, “the new Uber”, “the new Slack”, “the new Amazon” should be avoided at all costs. These companies already exist! You can’t win! And I’m 99,9% sure you are not a unicorn. You wouldn’t believe how many time investors get this bullshit. Don’t go that road, be creative and realistic, understand that niches are awesome. There’re big bucks to make in niches and in small, smart businesses. You are not going to be the next Mark Zuckerberg. But please also remember, this is just my opinion.
After all of this, please let me finish off with the following question: do you really need a lot of money to grow your business? do you really need an investor? Let’s talk about it next time.
