In the early stages of running a business, you must be extremely focused on your target audience. Whether you diversify as your grow, however, will depend on market conditions.
Use your youthful passion and drive as an advantage, and reassure potential investors with your willingness to seek counsel from good people around you.
As with any major recruitment decision, you must perform due diligence on your potential investor.
It’s important to remember there are always more good ideas than there are dollars – but there are a few key ways to boost your chances.
While media attention will improve your chances with potential investors, be warned that public relations professionals don’t work pro bono.
The reason why some sectors are slowing down – such as retail or print media – is because they’re being challenged by disruptive online start-ups.
While it might feel like Australia suffers from a “conservative” investing culture, the true situation is a little more complex.
A high profile name can certainly attract attention from investors. But that will count for nothing if you aren’t doing the basics by building and running a great business.
If you’re self-aware enough to identify your business blindspots, you’re on the right track to spotting the right co-founder.
While I would not go so far as to fly overseas, I most certainly would try to test your investor on their claims.
Cloud computing has made interstate business partnerships technologically possible. However, you need to be careful when managing the human side of your relationship.
Your current potential investor is clearly either trying to take advantage of your requirements for capital or has little idea about the issues surrounding founder motivation.
Before you sign anything, make sure your investor explains what they mean by “hands-off” in writing.
Generally, major banks do not lend to early stage businesses, but there are other options.
Investors’ potential questions are a good roadmap for how you should present your business opportunity.
You have identified a critical issue for investors – do they back the jockey or the horse?
The key to any successful JV is ensuring that the partners have an aligned strategy and a clear agreement on roles and responsibilities.
Investors in start-ups are wary of risk, uncertainty and slow growth. If your business plan does not answer or solve these issues, you may not attract funding.
If you are an early stage or high growth company it is very difficult to forecast how and when you will exit the business.
Your advisory board member should ideally add more than assurances to potential investors. They should also bring connections, customers, industry expertise, and a path to exit.