Start-up Entrepreneurs' Blog

To Entrepreneurs Seeking Funding and Investors for Your Start-Up … Let Your Competitors Help

January 28, 2010

What does the Olympics and start-ups have in common? The Olympics may be an athlete’s one chance to shine. Athletes train and practice their sport rigorously for years; they know their competition and what it takes to win.  But before an athlete gets the opportunity to compete in the Olympics, they first have to make the Olympic team and this is a difficult goal to achieve. Obtaining funding for a start-up is similar to competing in the Olympics.  In order for a company to play in a market space, they first have to find the investors willing to let them develop and market their product.  

At some point, all start-ups need external funding of some sort. How does a start-up practice and train for winning the funding process?  A start-up should prepare … prepare … prepare before asking for funding because you may not get a second chance to impress an investor.  A start-up should know its competition, which is every other start-up seeking funding.

Watch and Learn from Your Competition

There are many organizations and groups that have events where start-ups can present their products and their business plans.  Many of these meetings are open to anyone.  The start-up proposals can be given to an audience and to a panel of judges. The panels are usually composed of angel investors and venture capitalists looking for deals. Some meetings focus on start-ups seeking seed funding and other later stage funding. Some meetings are monthly and others are quarterly.  If you attend these meetings, you can observe the reception the start-up is getting from the investors. Even sitting in the audience, you will be sitting among potential investors who you’ll be able to hear whispering among themselves with comments. The most informative meetings are those where the panel engages each start-up in a 5 to 10 minute post presentation questions and answers. Write down the questions and note the focus of the questions.

Put Yourself in the Investors’ Shoes … What Would You Say?

At the end of each presentation, ask yourself if you believed in the viability of the start-up product and business proposal.  Would you invest in the company? Would you take a substantial pay reduction to work for the company? Then visualize it’s you speaking about your company. If the audience asked themselves those same questions about your start-up, what would their answers be?

As you drive home after the meeting ends, can you picture each presenter in your mind and remember what was each start-ups product and proposal. Think about the investor’s perspective, there are literally thousands of start-up seeking seed funding and less seeking series A funding.  If you can’t remember those start-ups as you drive home then why they would be given funding. When you are in a line-up of presentations, your presentation has to be memorable. You need stand-out from the crowd because there are many start-ups looking for funding and funding is a scarce commodity these days.

First Seek Advice

There is a saying in the venture capital business, “Ask for funding and you’ll most likely get advice.  Ask for advice and you’ll get funding”.  Many investors are willing to offer advice on a start-up proposal. You can often have informational meetings with them regarding a start-up concept.  Investors have seen a lot of start-ups and most investors are not newcomers to the start-up game. They’ve seen what works and what can go wrong. They can be a wealth of information.  If the investor is interested, offer to keep them apprised of your progress. If you meet milestones, let them know what you have accomplished.  Investors like to invest people they know.  So if you don’t already have relationships; it’s time to start building connections into the investment community.

It’s vital for a start-up to get hone its proposals because you may only get one chance to attract investors’ attention.  Above all, investors are looking for a great return on investment. Their main motivation is monetary. As Seneca, the Roman philosopher said, “Luck is what happens when preparation meets opportunity”.  A start-up achieving any success is much the same as placing in the Olympics, and if the start-up performs exceptionally well, you may get to stand on the medal podium of IPO’s.

Filed under: From Concept to Start-Up,Start Up Funding

Tags: angel funding, business funding, business proposal, elevator pitch, entrepreneur, start up capital, start up companies, venture capital funding