It’s an exciting time, as start-up culture has taken the business world by storm over the last ten years. People are eager to bring their visions to life and dream that “their” idea is the “next big thing”, and that it’s the “new and improved” Facebook or Airbnb. Because there are so many new start-ups launching every day, the competition for investor capital is tight.
Here are 4 simple yet potent tips to help.
#1: Your plan is the place for your galvanizing questions, not your perfect, permanent answers.
You may have the most original and inspiring idea your industry has ever seen, but it won’t get past your notebook without a well thought out road map.
I was talking with a friend who helped scale his start-up to over a billion in sales over a decade, his comment stayed with me to this day. “David, your business plan is the place you clarify your questions and sharpen your thinking, it isn’t a place to put permanent answers.”
This is a guy who’s raised millions of angel and VC funds and knows what he is talking about.
Seasoned investors don’t look to your business plan to see if you have all the right answers. They want to make sure you’re wise enough to be asking yourself the right questions. Are you asking the right questions?
#2: Pay attention to your market and know when you have to pivot.
“The ability to pivot when needed is key,” says Arvind Raichur, CEO and co-founder of MrOwl, a new app that allows users to take control of their Internet while sharing their world. “Make sure that you’re still staying true to your vision when you pivot. It’s very easy, in the start-up world especially, to get side tracked.”
Potential investors ideally want to see data points from your work in the world that support your ideas and business plan. But they don’t expect you to have it fully figured out, but rather they bet big on companies smart enough to adapt to the market.
#3: Position yourself different (and ideally unique.)
Investors and venture capitalists are frequently on the hunt for the “next big thing”, but they want to back ideas that are unique and exciting but also viable and profitable. Unfortunately, their continuous hunt for the next “unicorn” means that they see thousands of ideas every year. You have to know how to make yours stand out.
As author Seth Godin puts it, “You want to be the purple cow” and be memorable. Who could forget seeing a purple cow? I know, I wouldn’t, would you?
#4: But connect your positioning or central idea to something they already know and crave.
Sure, you want to pitch something different, but if you’re too different it’s really hard for them to “get it”. Find a way to connect what you are doing to a winner your potential investors crave.
Think how you can connect your idea to something that your potential investor already understands and gets. For example, when I was talking with Arvind Raichur about MrOwl, he described it this way, “When I speak with people about MrOwl, I simply share what our users say they love. We have heard many times that we combine the best elements of the web. Our users often state that our technology is as if, Wikipedia, Pinterest, and Google had a baby. And added in other functionality that you simply can’t do anywhere else.”
Isn’t that a cool way to give the essence of your pitch in a tight nutshell? That would sure get my angel or VC heart pumping.
It’s a balancing act between differentiating your pitch and big idea from everyone else, and also linking your new idea to proven winners so that your angel and VC audience can get understand your idea faster and be compelled to learn more.
Good luck putting these four ideas to work in raising your start-up capital.