What Do Experts Say Improves the Odds When Looking for Equity Funding?
Finding the cash you need to fund your startup idea is probably one of the toughest things an idea stage or other early stage entrepreneur will ever do. Earlier today I came across a great piece written by J.D. Harrison for the Washington Post. He shared the advice of some pretty heavy-hitters in equity funding that might help your pitch stand out. Whether you’re pitching privately to an angel or a venture capital firm, or trying to stand out from the crowd in a cattle call, here are what three experienced names in equity investing have to say they want to see—pay attention and you might increase the odds of a successful pitch.
Mark Cuban, Shark Tank investor and owner of the Dallas Mavericks: Cut to the chase. Don’t waste a lot of time with family history, the inspiration for your idea, or the challenges you’ve faced so far. “When it comes down to business, there is a simple scorecard,” says Cuban. “Are you making money or are you not making money? Are you succeeding or are you not? So when you go to raise money, always, always catch yourself and eliminate the backstory.”
Paul Judge, founder and chief technology officer at Purewire Inc: Find out what your potential customers think. “It’s become so sexy to pitch investors nowadays that people forget to first go talk to customers,” says Judge. “I have people pitch me, and when I ask what customers think about this, they tell me they don’t know. So why are you talking to investors right now.” If you’re not completely convinced that your potential customers will love your product and pay for it, you’ll never be able to convince an investor.
Gary Spirer, investment banker and chief executive of Questionmine: Anyone who has ever run a business knows it’s all about what Spirer calls the three ‘P’s. People, product, and potential. “I always look first at people, and that covers from the customers to the entrepreneur to the team,” he says. “Second is the product, because when you start a business, it’s a hunch, it’s a guess, and you have to go out and find out if people really want it or are you just a solution in search of a problem.” If you can’t convince an investor that you have the right team to get the job done, a product that solves a pervasive customer problem, and a reasonable idea that they will pay for your solution, you won’t find anyone interested in your idea. If you can, finding capital will be much easier.
Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business best practices, tips and advice accessible by weaving personal experiences, historical references and other anecdotes into relevant discussions about leading people, managing a business and what it takes to be successful. Ty writes about small business financing and other best practices for Lendio, in addition to sharing his passion for small business every week on Forbes.com.
Author: Ty Kiisel | Google+