Raising capital for your startup is a lot easier than growing the startup. Listening to a podcast hosted at Stanford University in 2014, Sam Altman asked a panel of seasoned angel investors including Ron Conway, Marc Andreessen and Parker Conrad, “What makes you invest in a company?” Here is a summary of their answers:
- Be an outlier
The founder must be so good that no one can afford to ignore him. Just to make sure founders understand how important this is, more than 50% chances of getting funding depends on your abilities as a person and not what your idea or product is. To investors, the founder is an embodiment of the idea or product. So if you speak lousily, that’s how they see your startup. Every detail about you matters to them, so package yourself – for real.
- In one sentence, what does the product do?
Before you approach an investor, you must be able to state in 1 sentence what your product or service does. This is particularly important because it enables the investor have a sense of what you are building (or will build) as you go further into details. This 1 sentence must articulate the main problem you are solving.
- Draw up an articulate business plan and financial model
The latter is a lot more important because investors don’t just throw money in the air; they expect their money to come back with yield. As a result, you must specify your value chain – what you are offering, how you’ll deliver this offering, and who you are delivering it to. You must be able to show a good understanding of the customer. Please avoid saying things like “my target customer is the over 50 million Nigerians on the internet;” that line is dope but kills.
- Don’t ask for a non-disclosure agreement, NDA
This is probably the most irritating demand to make of an investor. If your idea is so unique and original, you should get a patent or a copyright protection. Signing an NDA limits the investor’s capacity to invest in other ideas even if they are vaguely familiar.
- Be bold but with convincing metrics.
Till next time!
Author:ChuQDennis
Image credit:erecnigeria.com
