Many entrepreneurs, having wrapped their passion and intellect around their “next big thing,” can’t wait to hit the bricks and share their insights and enthusiasm with waiting investors, convinced that the check writers will “get it” and willingly part with their investment dollars. Unfortunately – and, in some ways, fortunately – the fundraising process is complex and requires focused preparation. Entrepreneurs who prepare carefully will be in a much stronger position, both to articulate their plans well and to execute on those plans when they secure investment capital.
Are you ready to present your plans to an investor who will not share your level of expertise or passion for your chosen domain? Professional investors are skeptical and, in most cases, generalists. Your job as the entrepreneur is to take your vision and make it as tangible and credible as possible. In the process, you are selling yourself — your market knowledge, product prowess, management ability, adaptability, and flexibility. You’ve got 30 minutes and about a dozen prepared slides to get the job done.
Having built two companies, invested in dozens, reviewed thousands of potential investments, and succeeded and failed, here’s my advice for entrepreneurs preparing to raise capital from investors:
Invest in yourself first. Investors will look at your financial commitment (your “skin in the game”) as a proxy for both your dedication and conviction. Investing time is interesting, but hard dollars take the discussion to the next level.