Have you ever wanted to be in a room full of investors and hear what they look for in a startup?
This week, I attended an online webinar hosted by the Knowledge Transfer Network (KTN).
This was part two of their two part series on ‘Funding and Investment for Young Innovators’.
- In part one, I heard from young founders talking about their funding and investment journeys.
- In part two, I heard from actual investors and what they look for before investing in ventures.
The panel consisted of various investors, both individuals and those representing big firms.
I found this session valuable; it’s common to speak with founders, but not so much investors.
What I also enjoyed was the diversity of the panel and what they’re interested in.
From young angel investors to large venture capital firms, there were investors for everyone.
More importantly, it was great to see they were not only high tech software startups.
In today’s blog, I want to share my key takeaways from this session with a panel of investors.
I’ll talk about what they look for, where to find them, and what to talk to them about.
What are Investors looking for?
First of all, I’ll start off by saying what investors are NOT interested in investing in.
As discussed by the panel most of them aren’t interested in investing in ‘lifestyle’ businesses.
In my previous blog, I talk about the difference between ‘growth’ and ‘lifestyle’ businesses.
Most investors invest in ‘growth’ startups because they want a big return on investment (ROI).
In fact, the panel quoted that they want a ‘10x’ ROI – a ten-time return on investment!
The panel did reassure me that there are some investors for lifestyle startups, but not many.
As well as that, they do want to see your financial projections during your presentation.
The reason is because they want to see how you think and whether you’ve thought it through.
However, they want to see the figures towards the end of the presentation, not at the start.
Finally, another thing they like to see is whether you have received any grants or awards.
This gives investors more confidence and a ‘seal of approval’ that you are worth investing in.
Where to find Investors?
I was surprised by the amount of places you can actually find investors.
The following is a list of some places where you can find investors, in no particular order:
- Your Personal Network (FFF – Friends, Fools, and Family) – this is usually a good starting point.
- Angel Investors – they’re usually entrepreneurs who want to invest in other entrepreneurs.
- Accelerators/Incubators – read my blog to find more about this unique investment platform.
- Grants – these are usually government awards that are not much but enough to get started.
- Crowd-funding – great if you already have a prototype and looking for funding for production.
- Venture Capitalists (VC) – they will give you a lot of money, but for more later stage start-ups.
- Funds – They usually provide a lot of money in certain sectors, but can be very competitive.
As you can see, there are plenty of different investors, some you have heard of and some not.
What’s important is to see which type is right for you at your stage of the business.
What to say to Investors?
The most important thing to do, before your investor presentation, is to do your research.
Understand what the investor you are presenting to is looking for in your pitch.
Make sure to tailor your presentation to each investor, as you would to a client for example.
For example, VCs are interested in hearing ‘super growth’, ‘scalability’, and ‘disruptive’.
Whereas another investor may be looking for ‘sustainable growth’ and ‘profitability’.
Also, VCs aren’t interested in having a ‘million dollar’ business, but a ‘billion dollar’ business.
Whereas others would be more than happy with a profitable million dollar company.
Make sure to talk about your traction so far, whether through sales, pre-orders, or sign ups.
Investors want to see what you have already achieved with the little money you may have.
Finally, talk about your great team. Investors love to hear that you are part of a great team.
If you don’t already have a team, don’t worry, talk about how you are putting one together!
Final Thoughts
Overall, this was a very useful session; I gained a lot of value from this quick one hour webinar.
I highly recommend you check out the session and the other one at the KTN YouTube page.
It was great to see many young investors on the panel; it was very inspiring and encouraging.
I too hope to one day be an investor for other founders, helping them scale their businesses.
It was very surprising to see how generous the investors were with their time and knowledge.
They are happy to direct you to other investors who they thought may be a better fit for you.
I think entrepreneurs can benefit hearing more from investors, as opposed to just founders.
While hearing startup stories are great, I think hearing from investors is even more important.
I hope you have enjoyed reading this week’s blog about funding and investment for founders.
Do you have any experience with investment/investors? Please share in the comments below!
If you enjoyed reading, check out my blog: The Importance of Asking for Help for Entrepreneurs
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