Keys to Venture Investibility
Attracting support from investors isn't as much of a black art as it is sometimes made out to be. Sure, there are often unknown competing factors such as how many other options is the investor currently considering putting their support into? Or sometimes things as simple as do the investors currently have a hole in their portfolio that matches what you offer? For the sake of getting some solid insights down on paper though, let's leave these to one side and focus on what we can control.
So what do investors actually look for? What resonates with them? What catches their eye? On this level, investors generally approach & consider opportunities in a similar way. There are many ways to summarise this – the simplest being the:
Why? Why would anyone care – motivation, purpose, mission. We live, breathe, fixate & obsess on the 'why', it is why we do what we do. We consider deeply what it brings to the people that use it; what impact it has. We spend so much time & energy on this, it is so front & centre of our every thought, but yet it seems to be the easy thing to neglect to actually say. I find it is better to err on the side that the audience isn't really actually listening rather than they 'already get it' (I am sure they are, a bit of poetic license). I am not suggesting being rude or condescending, rather, I am suggesting that it is vital to say it, make it clear, make it relatable, make it relevant, make it felt.
So What? What exactly do we stand to gain – what problem is being solved / need fulfilled, total addressable market, size of the prize. If the 'Why' is the yin than this is the yang. Some would argue this is part of the why... & maybe it is... that is kind of moot though, this is definitely worth highlighting & it feels like a different mode of thinking to me at least. The 'why' is maybe more Pathos but this is perhaps more Logos. Anyway! It might be crystal clear that a problem should be solved, but quite literally who cares if it is? For example, making it easier for a job to be done sounds like a good 'why' but knowing that job needs to be done 1,000,000 times a day at an average cost of $x billions adds the power of 'so what' to the equation.
How? How will we win – the solution, traction, go to market, likelihood of execution, scalability. Things get a little circular here. The first level of due diligence is less about how good the plan is but rather to look to see if there is a plan at all... but then the second level looks at how reasonable it is (not how good it is)... then the next step seems to be replan anyway! You need a strategy that passes the sniff test for how you'd get to a solution, how people are keen & already using it, how you will get more people on board & how it has all been digested into solid & known steps to get it done. Accept & acknowledge that the plan will change as we progress, time passes & new information comes onboard. Investors tend to look for your willingness to be flexible in the plan & your willingness to take their expertise onboard to help you execute... but there needs to be an initial plan that is sensible enough to get the conversation started in the first instance.
Vapour? What is tangible - What can be seen, what is in progress, what is measured & measurable, what can be appreciated, what can be touched, what independent evidence is there that this is a good option to pursue? You need to demonstrate: Traction & Potential, Ability to Execute with respect to Business-Tech-Product https://nathankirchner.wixsite.com/rambledthoughts/post/7-billion-others, & the Team suitability to get it done. It is simple. Investor hear a lot of stories, hear a lot of dreams, & wade in vision on daily basis. Show them stuff, go out of your way to show that something is real, show them any and even thing that validates demand, the solution, the benefits of use, viability, everything. A prototype held together with wishes & dreams brings a lot more than a beautiful CGI render of your idea. Ideally you'd have both, nevertheless, lead with the tangible. Think of this as death winning by a thousand cuts artefacts.
Beer? Would I have one with these people? This is real. Easy to dismiss, yep, but real. It is perhaps counter intuitive & I can believe that it doesn't make the cut for inclusion in the typical MBA programme. It seems silly... how could professionals be influenced by something like this? It is simple, they are people. People that know they will be working side-by-side with you for the next 5-10 years to come if this deal goes ahead. People that know the value or having someone to turn to when times are tough. It is often neglected in text book preparation for a fund hunt, but is a very real thing. Simply, 'could I be in a day-to-day working team with these people?' is real criteria for attracting investment. Keep that in mind.
This is perhaps the short list, the more complex ones have many aspects. Whilst the exact number that must be considered varies, my experience has led me to converge on these. This breakdown has proved itself to be the simplest to master & highly effective. Thoroughly thinking through, providing robust rhetoric & stage appropriate demonstrable outcomes for each & every one of these aspects tends to provide a hole free & compelling venture backbone to ride through to deal closure.
<the ubiquitous 'honest question'> 'why should I believe this above any of the thousands of lines of similar content / must-have lists / suggestions that are out there?' I hear this a lot & I genuinely can feel it. I can't help but get a little preachy here. You shouldn't believe anything you read. You should question everything, compare it with what you already know, find out more, merge multiple viewpoints & forge your own... I am not suggesting other content should be ignored...
<the insight> ...I've considered it ad nausea though & had too much first hand experience being on both sides of the above hunt. So if you are looking for a bit of a short cut & are happy to note that I am sure there is a nuance here & there that is more 'correct' in 'this' case or 'that', the general pattern that shakes out of the plethora of advise out there on this topic falls into these 5 basic steps. They are a solid foot in the door, more work is needed to get to the unicorn though!