Excite Investors to Your Business
Many start- ups are cash hungry. Ads a result the founders spend a lot of time looking for investors to fund their cash hungry businesses. Is there an easy formula to attract new funders or investors? Yes, there is. If you can align yourself to the interests of the investors your job is done. You get the cherished money that oils operations. Here is how you can do it:
1. Investors want a return
When all has been said and done you should be able to sell a story that can result in some acceptable return to the investor. These are not guaranteed returns but believable returns. The investor should be excited that one day he will reap some rewards. It’s not in the sophistication of your innovation or how passionate you are in the venture but whether there is prospect of getting returns in reasonable time.2. Novelty of customer offering
Critical to any business sustainability is the type of need being served and how many customers are being served. If the need is unique and there is chance to serve a sizable market then you win. Consider the mobile phone project of Dr Strive Masiyiwa. No one was thinking of mobile phones back then but there was scope to offer cellphones to a lot of people. As a result some banks were willing to take the risk. Even without a license he could get financial support. Therefore the uniqueness of the product and its ability to be used by many people can contribute 50% of the evaluation process.3. Well- articulated business plan
It’s not in the business plan but in the planning. A good business plan that is well presented shows that the leadership fully understands the business. A well articulated plan allays fears that you are groping in the dark, you don’t know exactly what it takes to create deliver value to customers. Since investors are busy people they don’t want a lot of pages and presentation slides. What brings them to your side is a clearly thought out elevator pitch or powerful executive summary. A prototype or working model of the proposed innovation takes away all doubt and fears. An excellent executive summary, elevator pitch or prototype opens the door to the prospective investor’s bank account. You get the funding. It’s not in the number of words but simplicity and relevance.4. Your capability to advance business
What drives a good business is knowledge, passion, commitment and integrity of its leaders. Therefore investors must be fully convinced that you are not a chancer but someone who knows what is to be done and is fully committed to do it. Commitment is key to success. You can have all the resources you need but if you are not committed endeavors fail. A half knowledgeable but passionate entrepreneur is better than a half passionate but knowledgeable one.5. Believability in the project and founders
The last test is whether whatever you have proposed is believable. Are your assumptions reasonable? Can you be trusted with money? Are the cash flow projections believable or not?No matter how many marks you score in other areas, investors also use gut feel to make final decisions. If they do not “sense” success, they pack their bags and wave good bye. Therefore whatever you do or say make sure it passes the ‘believability test”.A final word of caution. Always remember that it is a difficult and time consuming process to find a suitable investor. Be patient, prepare early and be cooperative during due diligence process
