|#105 MWAVC| - Investors' golden triange 🥇
The basics you need to know.
Short post today. Got a lot to do— including Ghana Tech Summit. In that vein, I realized most of these conferences have pitch competitions. Quick one from my notes— three things investors look out for re: your business. Picked from an article I read ages ago and keep in my Notes. Go back to it from time to time as it’s a very good read.
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If your “idea” falls in that sort of category, then here’s what you need to know about investors and the process of raising money:
1. Investors don’t bet on “great ideas.” They bet on viable business models and proven traction.
Perfect example: the concept of Snapchat was laughable when it first launched. Investors wouldn’t even consider investing in a company like that—until 2,000, then 20,000, then 100,000 users started using the app. Traction is what got investors interested, not just the startup idea itself.
2. Investors don’t just bet on viable business models and proven traction, they primarily bet on the founder(s).
This is something I didn’t fully understand until I reached a financial place myself where I could even consider the thought of making a small angel investment in another entrepreneur. As soon as I started entertaining that thought (with a few friends who were running businesses of their own), I realized that what drove the majority of my thinking wasn’t just the concept itself, or even how the business was doing at that moment, but how much I believed in the founder(s).
This is a truth among investors. So if people aren’t willing to bet on your idea, you also might consider whether the issue is your business or you as the founder. If the latter is the case, understand why or why not and capitalize on that.
3. Investors don’t want to pay for you to “figure it out.”
This is another huge, huge fallacy in the business world, and it’s one novice entrepreneurs follow blindly. The idea that an investor will just hand over $25k, $50k, $100k+ for you to quit your job and fund your first-time entrepreneurial learning process is naive. If that happens to you, congrats, you got lucky. Because the vast majority of investors want to invest in something that already has direction, is already moving, and already has other people jumping on board—which is why the whole “art” of fundraising is about timing, and ensuring that everyone is joining the vision at precisely the “most valuable” moment of your current lifecycle.
So if your idea requires raising capital to even begin in the first place, then I encourage you to find a way to validate the opportunity. Create a landing page and see how many people opt-in or sign up or pre-pay for your future product or service. Go get a handful of commitments from partners who agree to use your product once it’s built. To show investors what they’re looking for, do anything to show investors that your train is already moving, and people are jumping on board.
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Remember January is a long month. Don’t go broke trying to impress this Christmas :) If you’re looking for investment opportunities, let me know.
📱📱Quote of the day
“The difference between successful people and failures is that valid excuses are never enough for successful people.”— FON.
Remember: “Until the lion learns to write, every story will glorify the hunter.”