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How do I seal the deal on seed round funding?

Monday, 19 November 2012 | By Franz Madlener

I’ve got a potential investor for my seed capital round. He seems interested in the concept, but do you have any tips on what I need to do to get him over the line?

 

What do investors generally need to be reassured of/impressed by in order for them to seal a deal?

 

I will let you in on a little secret that all successful entrepreneurs know, and it is this: Investors don’t buy in to what it is or what it does; investors buy in to what it does for them.

 

Let me repeat it, as so many budding start-ups miss this point completely:

 

Investors…

 

Don’t buy in to what it is.

 

Investors…

 

Don’t buy in to what it does.

 

Investors…

 

Do buy in to what it does for them.

 

All investors seek a connection. You need to be the conduit. The credibility comes from your business and financial plan. Think about it.

 

If your only competitive advantage is price – prudent investors know that some idiot will always try and outprice you.

 

If your only competitive advantage is location – prudent investors know that someone else will eventually build a bypass to their door.

 

If your only competitive advantage is your “exclusive” product – prudent investors know that someone else will eventually outspend you on marketing their ‘exclusive’ product.

 

Really good potential investors want to know that your start-up is the right investment for them; that you have covered all their bases; that they “get it”.

 

Great start-up entrepreneurs know how to help investors make that connection – they ask the right questions. Lots of questions. They understand what the personal motivators are and they keep looking for ways to help connect the investor with their vision.

 

Don’t just try and “sell” what you have got. Try and find out what your investors’ motivation is, and how you can connect your concept with them.

 

And guess what: If your potential investor and your concept don’t actually have anything in common, then it is best to find that out before they put money into your start-up!

 

Good luck with finding that connection.