If you’re a budding entrepreneur the chances are that you’re thinking about getting investment of some kind, or that you will at some point in the future. I was recently fortunate enough to attend a seminar by Ivan Nikkhooas part of the New Entrepreneurs Foundation. Here’s his expert advice on what you need to become a backable entrepreneur.
Be a missionary, not a mercenary
Be honest with yourself for a second. Are you solving a problem you really feel strongly about? Or are you just trying to make a load of money? A mercenary just wants to make money and would start any company that they thought would bring the biggest ‘prize money’.
In reality, chances are that the mercenaries of the world are not going to be a successful entrepreneur. And those mercenaries that are a success, won’t do it with backing from a venture capitalist. Think of it from the investors point of view — you wouldn’t give millions of pounds to the guy that will lose interest as soon as a more lucrative opportunity comes his way. As soon as a mercenary is feeling the heat, they’re likely to give up and find some other way to make money.
Now there’s nothing wrong with wanting to make money, but it can’t be the only thing you care about. Investors want to see that you are a missionary. You care passionately about solving a problem and you’re committed to getting it done. You’ll not only attract investment — being a missionary will make it easier to attract early employees who are as committed as you are, and your customers will join your ‘tribe’ in droves.
The second step to being a backable entrepreneur is to be an innovator. Investors are looking for huge returns on their investments, and that’s unlikely to happen if your idea for a start up is to do what someone else is doing/has done.
In order to get investment your company needs to be addressing an underserved niche, solving a problem in a way that wasn’t possible in the past, or some other innovative approach. Don’t go to a Venture Capitalist and expect investment for your dog grooming shop unless you’ve got a reason for thinking that you have an innovative approach that gives you some defensible competitive advantage over the incumbents.
Of course being innovative extends to more than just your business model. The journey from start up to billion dollar exit is frought with problems that have no easy solution. When you’re running out of money and that big business deal is falling through, you need to be an innovator to solve what looks like an impossible situation.
Which nicely ties us in to the third element of being a backable entrepreneur…
Cope with stress well
By the time you’re stood in front of an investor, you’re almost certain to have learnt the lesson that being an entrepreneur can be a stressful profession. You need to be able to convince your potential investor that you’ll cope with that stress effectively rather than collapse like a dying star.
How do you demonstrate that you will cope with the stress? Having a track record of executing well is a good start, particularly if you have played a key role in launching a successful start up before. Another great indicator is that you have managed to create a great team around you. When you have a great team, you can delegate responsibilities and share the load.
So there you have it, who knew being a ‘backable entrepreneur’ was so easy? Of course it’s easier to say than to do. Get out there and be a stress free, innovative missionary!
I’d love to hear from anyone else out there who think there’s something else that should be added. Get in touch!