If you fail at these, investors will say goodbye to you.
It’s a new year and you are ready and energized to go find investors for your startup, believing that nothing can stop you. But wait! You haven’t checked your startup and materials yet. So before you send out that pitch deck or next cold email you should have a look at a couple of key areas. Because if you perform badly on these, investors might not pick up the phone when you call.
What is the first thing an investor might do to learn about you? They check your social media handles. Both personal ones such as your LinkedIn profile but also your company website and social media sites. Do you create trust? Do they believe you can build a great startup? And does your company excite or depress you at first glance.
Problem & Solution
The core of your startup is the problem you are solving and the solution you are offering. Many founders talk about their great idea but forget to tell which issue they are tackling. Investors want to see that the problem is serious and widespread enough to justify spending large amounts of capital to support it.
You have found an immense problem and a viable solution, but have you executed it already? Is there a product out there in the market that you developed and who did develop it? Can you scale your product to millions of users if needed? If you tell an investor: “I need so and so much money to build it,” the likely answer is that they prefer you build it with money from somebody else. You can always create an MVP, a minimal viable product, and show that your idea is worth scaling up.
Who is building the product? What kind of founders and how many? How is the equity split between you? The team is who executes the idea. Investors rather invest in an amazing team with an average idea, than into an average team with an amazing idea. Because market dynamics change and startups have to pivot and change their products constantly, so an idea is temporary. Skills and expertise are enduring.
Does your business make money? Have you put your skin into the game by investing your own capital into the firm? Have you already raised capital? A business is not a charity, so investors need to make sure you are financially healthy and that the company will make enough profits to give them returns on their investment.
KPI & Traction
How is your company performing? An important indicator for evaluating any startup is seeing how they perform over time. You are already a year in existence, what did you do in that time? Did you grow your user and revenue base? How did your product develop over time and did you reach important milestones? If you cannot show exponential growth, investors would rather pass on you.
Pitch Deck & One-Pager
Many founders hope by sending a nice pitch deck or a one-pager investors will love your startup right away. The reality is that most pitch decks are unread as investors are flooded by them. But even when you did everything right before and got them to read it or you can present it personally, these documents need to have the right content, structure, length, and design. If the first page of your deck looks like it was designed by a child it might be lovely to the eyes of a parent. But an investor will close the document right away. If you are jumping right and left without a clear narrative or you are missing our key information such as your business model an investor will be left confused or lack understanding.