So you’ve got a start up and you’re looking for investment. We work with 100s of start-ups, from those with virtually no money and those that are self funded all the way up to those that have angel investment and investment from VC firms.
We are often asked “How do we get investment?”
Lets be fair to start-ups for a moment. They are start-ups! That means that any growth figures are highly speculative and any business plan is liable to change pretty quickly. So why do so many investors insist on seeing business plans with detailed financial figures? You are better off giving investors what Don Cheadle’s character in House Of Lies refers to as “FMA numbers”
We’ll set the scene briefly, you are in a room with some potential investors. They are asking you questions that nobody can know the answer to and they are being all pompous and self satisfied. Then one of them queries the growth figures in your made up financial plan. “How did you come up with those numbers?” asks the investor, trying to sound intelligent.
“Oh, those are FMA numbers” you reply confidently. The investor doesn’t want to look stupid by not knowing what you mean and therefore seems happy enough with your answer. You then roll your eyes and whisper to your partner “FMA stands for From My Ass”
Be honest for a moment, investing in a start-up is a gamble. What is more important? Some made up figures and projections or the basic idea and the people behind it? From our experience, if the people you are speaking to are more interested in made up figures than they are in the idea and you then they probably arent the right investors for you.
We believe that the best pitches for investment are no more than two or three pages long. They will get over the idea, the concept, the value that the people behind it add, the current monetization strategy and the exit plan. Thats it!
And remember, investors are looking for as many problems with your plan as possible simply so they can get more equity out of you. Even if they don’t care about a problem they will act as if they do in order to get themselves a better deal. And who can blame them? Just see it as a game and a dance that you have to go through. Perhaps most important of all is self belief. Yes too much confidence can be self defeating but at the same time you should never be afraid to walk away from a deal.
Also, don’t make the common mistake of spending large sums of money on a website and platform to leave yourself with no marketing budget. Running a business with no marketing is like waving in the dark, you know what you are doing but nobody else does.
Don’t make the mistake of waiting until everything is perfect before launching. You can build an entire business with social media and content. And the best thing about social media and content is that you can start to build an audience of potential customers before the site is even launched!
In summary, yes there is a certain amount of compromise involved but do not get pushed around by investors. If they weren’t interested they wouldn’t be speaking to you in the first place and if they push too hard you should walk away.
The answer to the question of how to get investment is simple but requires creativity and hard work. We suggest you Google “how to get investment” and then do the exact opposite of what everyone else is doing. Over to you!