As a first-time founder seeking investors, what is one way to attract the interest of a potential investor?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC has also launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Sell a Product, Not an Idea
Investors are not really looking for ideas, and if you do end up finding someone to put money into your startup, you’ll end up losing significant equity. As long as you and your co-founder can handle the financial burden, focus your energies on coming up with a great product. With that taken care of, approach investors and show them how you can make money for them.
2. Tell Your Personalized Story
Tell your personalized story of how you got into your business or niche in your pitch. It should include a few personal details about yourself and your past work experience, and display why you’re passionate about your current niche. Include a few specific anecdotes as well. When a potential investor can see the face behind the business, so to speak, they might be more inclined to offer funding.
3. Do Your Due Diligence
Do as much due diligence on the type of investors you want before you pitch them. This will limit the pool of investors, and will make your pitches more personalized and compelling to the investors that you’re targeting.
4. Build the Right Team
Investors invest in people, so if are you a first-time founder, you can pique the interest of potential investors by surrounding yourself with other people who have strong records. Bring on employees or board members who have played key roles in other successful companies, particularly in business that are in some way relevant to yours.
5. Already Have a Proof of Concept
So many entrepreneurs and creatives only have ideas that they feel could be a “game changer” so they talk a good hype about all of the hypotheticals. But a potential investor is a lot more interested in a business that knows its target audience, caters to that target audience and has recent success in capturing them.
6. Have Passion
If you are going to sell your idea to an investor, you have to be 100 percent in love with the idea yourself. If you’re green, investors want someone who is “all in” on their idea or business. You being excited will get your investors excited.
7. Focus on the Mission, not Money
I remember when I was working with a startup that was focused on their mission. They were so focused on the mission that investors came to them because they saw their potential. If you really want investors, then focus on your mission rather than the money. This will motivate investors to want to fund your company because of the “fear of missing out” effect.
8. Have the Gold Standard: Revenue
Gaining traction, exposure and building a prototype are great steps. However, the gold standard is to have revenue which funds your operation. As a first-time founder, this will help craft your story, while also showing a promising track record of growth. Give your investors the peace of mind that you understand your goal is to attract customers to spend money on your products and services.
9. Have a Strategic Content Plan
A strategic content plan not only brings new customers to your website, but it also brings investors that are searching for the same thing. Find out what your customers are asking on Quora and write content that answers their questions. This will help you attract many customers, and maybe a few of those customers will be investors, as well.
10. Build a Solid Foundation
For any investor to take a chance on a first-time founder, a significant leap of faith is required. Build an operation that investors will want to bet on by gathering a team of seasoned professionals with a track record of success. A great team will streamline processes and make them as transparent as possible, ensuring everything is in order for the due diligence phase of investor interest.
11. Have Social Proof
It’s well known that social proof is a key filter, most often in the form of a double opt-in introduction from someone the investor trusts. Understand that investors are betting on the horse (the business), the jockey (the founder) or the track (the market). Ensuring that you can speak articulately to each of those three will help show that, while this may be your first race, you are not an amateur.