Back in the day, investors were willing to take far more risks when deciding what to put their money towards. A great idea, a compelling case, and / or a charismatic entrepreneur could cause a seasoned investor to open her or his pocketbook to support the next “big thing.” Today, however, it’s not as easy as all that.
The glamour of entrepreneurship has driven millions to start their own business; over the years, there has become fewer and fewer barriers to entry. With more startups competing for funding, investors have begun setting higher expectations for the ideas they invest in. It’s not impossible to catch the eye of an angel investor, but it does take a bit of strategy and yes, charisma (fueled by passion).
Scott Dunn is the founder of The Unicorn App – a free mobile platform that connects entrepreneurs with potential investors in their area (think Tinder, but without all of the shady implications). Dunn and his team have helped numerous startups raise capital in the short year that the app has been around and have noted a few key factors to creating success. Here they are (in no particular order):
Show Off Your Team
“When it comes to early-stage startups, an idea gets you the meeting, but the team gets you the check,” Dunn says. That is, investors hear countless great ideas every week – what they’re really investing in is the team behind the idea. Why is your team the absolute best to pull off this project? Define that answer and make sure it comes across in your meeting.
Pre-revenue companies aren’t getting funded the way they used to. The invention of social media and big data have given investors a better set of metrics to predict success – plus, as I noted earlier, there’s way more competition. So nowadays, investors want to see profit before they invest.
Dunn suggests finding a way to turn a profit early and hard sell it. By applying extreme focus to this aspect of the business, you can gain early traction and prove to your potential investor that your idea already has an audience.
Play to Your Strengths
Look, you don’t have to prove that you’ve mastered every area of business there is – but you do need to show that your idea is strong. The best way to do that, according to Dunn, is to identify your best metric and angle your presentation so that it puts your business in the best possible light.
Keep it Simple
First time entrepreneurs often make the devastating mistake of making the idea too complicated. “If you can’t explain your platform to a toddler, it’s too complicated,” Dunn says. “Remove layers and try again.”
To safeguard against over-complication in front of investors, “pitch” your idea to as many of your friends and family members as possible. Make sure they get the idea loud and clear; if they don’t – get their feedback and put it in action. Remember, practice makes perfect!
Raising is tough. Dunn suggests enhancing your odds by taking as many meetings as possible – this saves you from placing all of your eggs in one basket, so to speak. Oh, and the added benefit is that the more you pitch your startup, the better you get at it. Take each meeting as a learning experience and use it to continuously get better each time you pitch.