It’s the start of a new year, and for many, this means a new shift in focus for their business. Maybe 2020 was the year you focused on growth, product viability, or market — but now you feel ready to start looking for investment.
There are two questions to ask yourself here:
The first, is how do you find an investor to fund your startup? The second, do you really have everything in place to begin your journey to finding an investor?
I’ve come across many startup founders who believe themselves and their business to be ready for funding, right up until the moment when they need to secure it. At that moment, they realise they’re lacking in some of the most basic, yet critical, processes and methods.
So what can you do to avoid these mistakes and ensure that in 2021, you’re prepared to meet the needs of investors?
- Have a Proof of Concept
To put it in black and white, investors want to know that your product is worth it. This doesn’t mean to say you need a full MVP — it could be a prototype or even a bank of pre-subscribers. However, the further away from a working product your proof of concept is, the more evidence you’ll have to give to back yourself and your startup. For instance, five paying customers on an MVP are going to be worth far more, than ten sign-ups to a landing page.
- Have a Solid Team with Clear Responsibilities and Expectations
The only thing more important than the product idea is the team. A good investor knows that even the best ideas can crumble as a result of the short-fallings of the team behind them. With this in mind, you need to have a team behind you — either employees or freelancers — who show a multitude of skills and responsibilities. If you are technical, you need a non-technical body. If you are non-technical, you need somebody driven by marketing and market research. You need all sides covered.
3. Show a Clear Path to Exit
An investor is putting their time, money, and faith into you. So it’s your responsibility to show to potential investors what your returns are and, in a worst-case scenario, the exit strategy for their investment. The path to exit is a contingency plan, that shows to the investor you’ve considered all scenarios and can showcase to them what exactly you’re bringing to the table to ensure this doesn’t happen.
Of course, there is more to securing investment than these three principles. However, by ensuring you have these in place, you can guarantee the big questions are covered and you’ll be prepared for any potential investor.
If you’re a startup founder looking for investment in 2021, I’ve built a programme specifically for you. Kick-Off is a 6-week course for founders and entrepreneurs to learn and implement the best-practices needed to secure investment. On completing Kick-Off, not only will you investor-ready, but you’ll also be invited to the Tech Gorge community.
The Tech Gorge Community is limited to engaged, informed, results-driven entrepreneurs with an active business concept. Members will bring value, initiative, and insight to one another, and in return will gain introductions to potential investors and like-minded entrepreneurs.