What Do Investors Want?
The title is somewhat stolen from the question that has been on everyone’s lips since the beginning of time, and that is “What do women want”? Given that this particular questions has caused many to lose sleep, from eager teenagers to Einstein-level-of-intelligence men, human kind has evolved to ask itself less elusive questions. And given that startups are now the shiniest of the toys, the question of the moment is How do you make money? Or, you know, just what are investors looking for in a startup? (Spoiler: yeah, you guessed it, it’s money).
But not just in any form. The popularity of startups has risen tremendously and is rising constantly. I mean, it’s the Promised Land. The premise is Random Joe’s American Dream, with a twist of freedom. You get to have your own business and built it with other people’s money.
Basically, for an entrepreneur, there’s no catch 22: the only risk is, if you’re not doing the startup dance while in college, quitting your job for something that will soon fail. And even that’s not such a high risk. HR managers are much more inclined to hire someone who has had the guts to go out and try to do something on his own. So, unless you have your entire family depending on you, launching a startup — investing time in your own idea — is a pretty much risk free deal.
Hence the popularity.
The downside (or not) is that popularity means competition. Which means only a handful of the ideas people are toying with are taken to the next stage.
While playing around with Swapr, I’ve learned that while the idea matters, it matters a lot less than I used to think. Investors or mentors interviewing for accelerators all around the world (we’ve pitched to people in Hawaii, Budapest, Lisbon and more recently in Istanbul) usually have the same questions. Which means there are a few things they’re interested in and if you pay attention to them, you might just gain interest.
The answer to the question “why is this the best team to see this idea through?“ isn’t “because it belongs to us”. A car isn’t better if it has two engines but lacks the wheel so a startup doesn’t have more chances if all those involved are engineers. Sure, the post pitch question I usually get when I talk about Swapr is “do you have a technical person in your team?” but when the answer is ‘yes’, it’s all they need. The formula of a perfect team is a member with hard skills, one with soft skills and another who can bring in the cash.
I used to think that other than the idea, I don’t really bring anything to the table (my main skills are communication & public speaking) but after hearing pitch after pitch given by introverted engineers (I love them, on a personal level, I’m mostly attracted to this type of people, but let’s face it, few are the best on-stage specialists), I gained more confidence and learned that the fact that I actually love public speaking is a great trait to have, especially when Google searches show that people are more afraid to come on stage in front of other people than of dying.
There’s a great momentum here worth noting. Women entrepreneurs. So much emphasis is put on closing the gender gap and on women in business, that I actually feel it’s the right time to go work on your own especially if you’re a woman. Malcolm Gladwell talks exactly about these types of outside opportunities in his book Outliers; if Bill Gates was born in the right year and his environment helped him thrive, it’s pretty much the same with entrepreneurs these days. Women have now more than ever the opportunity to build their own companies.
Probably the most important question is “how do you plan on making money?”. This is pretty simple to see. Usually, a good business plan is what gains interest. Don’t answer with “every big company offered its services for free at first, so we’re just gonna see what works later on” because you might come off as too much of a gamble.
The answer you provide more often than not is not going to become a reality, but investors just want to see you are results-oriented and you know that a profitable company needs valid ways of making money. Chances are they’re probably more experienced in this field than you are, which is why they’re going to help with the overall plan. They just want to make sure you know what you’re talking about, that you’ve thought this through.
Focus. On one thing at a time and get ready to put your heart and soul in this project. Give it all you got. Passion is palpable, can be seen and felt by those around you when it transpires so powerfully through your fingers. Let it flow, let others see it in you and it will be just the cherry on top of a great recipe for a successful start in the startup world.