Tom Taulli - Forbes Finance Corner 5-11-11
It’s not 2008 but growth capital isn’t exactly hanging on trees, either. For those looking for funding, stick to the fundamentals. Here are five:
Network furiously. Even though we live in a digital world, investors are living, breathing organisms–which means that they still prefer face-to-face meetings. After all, they are betting on a company’s team, and teams are also composed of carbon-based mammals. That’s why entrepreneurs should go to the places where investors hang out, such as conferences. It’s also smart to network with the so-called gatekeepers: attorneys and accountants. They will often make introductions to investors.
Master your presentation. This means having ready, reasoned and rigorous answers to a few key questions: How big is the market? How will you make money? What makes you different? Why will customers buy your product? How much money do you need? What will you spend the money on? It’s a grueling process, but it will hone your ideas and help your business succeed. Oh, and get a tablet computer, like an iPad: You will be able to give a presentation anytime, anywhere (check out my recent article on mobile presentations).
Hire an attorney. Entrepreneurs get obsessed with how much their company is worth. Stop. Valuation of a financing is only one of many critical factors. Investors have other clever ways to get an edge. They may get better preferences, such as in the event of a sale of the company. A smart attorney will save you a bundle later on.
Delight a few customers who can spread the word. Having a great product isn’t enough–the key is getting customers to say you have one. Most investors will talk to customers. If they see there is lots of enthusiasm for the product, it will certainly make funding much easier.
Believe. If you waffle, investors will get antsy. Be willing to listen, but have confidence in your vision.
Kevin Brown www.kbsinsight.blogspot.com
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