Many people ask me if it’s possible to raise capital in the traditional sense these days. Everyone knows and understands that lending practices have tightened and many VC firms have gently (and occasionally not so gently) refused to accept any more submissions. But is it impossible to raise capital? Of course not, it’s just even harder now. That’s not to say that raising capital has ever been easy, it has always been a challenging process. If it was an easy process, there wouldn’t be companies charging money to hunt down investors and business coaches priming you for your journey ahead. Keep this in mind, no one can ever guarantee that you will get funding. It’s an impossible to guarantee, and illegal to make any such claims.
What do investors want to see from you? It’s certainly not 30 pages of a long winded business plan, especially if it’s a poorly written one. It’s not an unsolicited phone call from you to take 45 minutes of their time while you wax poetic about your business or idea. The same logic that says to keep your resume short is the same logic you should take to approach investors with your business. There are a number of questions that investors need answered, and any entrepreneur answering them must now be in even more concise, with verified details supporting your business claims. Some of these questions might surprise you, particularly if you’re not well prepared to face investors.
1. What is your business pitch? In one sentence.
This sounds easy enough, but too many capital seekers wind up grasping for an answer to this. What is it that you do exactly? Why is it exceptional?
2. What is your competitive advantage?
So you built a mouse-trap. How is it better than other mouse-traps? How do you intend to overtake the current mouse-trap on the market right now?
3. Define your market.
Who are you selling to? This basically asks you who your customers are, who they will be in the future, how big this pool of customers is, and whether or not this pool will grow in the future. You will need to be able to elaborate on your answer.
This is list not exhaustive, there are many more questions regarding your marketing and sales strategy that need to be answered, preferably in less than a few sentences.
In order to better position yourself to get funding, you need to take your feet and put them in the shoes of your audience. Many entrepreneurs wind up deeply entrenched in the details of their business, they forget that the audience isn’t psychic, or willing to fill in the blanks themselves. Don’t make it hard for them to get these answers. Investors generally are not willing to pull answers out of you; the onus is on you to give them what they want and need to hear, preferably quickly and in a straight forward manner.
These questions are just a small tip of the …Read more