On Investment Capital

Investment Capital can seem like this elusive pie in the sky unless you come from a wealthy family, or have past success. On the contrary though, it's not that difficult to find, all you have to do is focus your efforts.

First off you have to get your pitch down to a science. Many pitches fail because they answer the wrong questions. The right questions depend on the stage of your business - some are getting started with an idea, others have a lot of revenue already. Focus your pitch on the key questions for your stage of business. Most pitches don't answer the question that is being asked of investors, which is what is the investment and what's the return?

You need to think like an investor. Not all investors think alike, but the hurdles are well known within the investment world. Investors want to know what their return divided by investment could potentially be. Risk is all around. You need to solve an important problem, be unique, have a sustainable competitive advantage, focused market segmentation, an attractive business model, milestone driven capital needs, and a no-risk CEO.

Conventional wisdom would say most companies fail because they run out of money. Why do they run out of money? Why are they not able to raise money?

The sweet spot is if you can find an unfair and sustainable competitive advantage, because you are solving an extremely important problem in a unique and innovative way.

Talk about what you have done so far, now what you're going to do. Many weak startups and their leaders seems to talk more about what is in the future, as opposed to focusing on the core product. Anyone can say we're going to add a mobile version, collaborative filtering, visualizations, marketplaces, plugins, advertising networks, and social networking to their product. Today, more than ever, there is a lot of open source and off the shelf software with developers in the world to put these things together in a couple weeks.

Build a temporary team. Develop product, prototype, and get the customer.

Venture Capitalists are supposed to nudge, coach, encourage, and otherwise be supportive of management.

Angel groups usually have a bias toward simple technologies and companies that are not likely to need more than a few million dollars in start-up capital.

The following are some great Web sites for listing your business when raising capital.

  • Grow Venture Community is one of the first global, community-based platforms dedicated to entrepreneurs and investors, Grow VC enables great ideas to get visibility with the right investing audience and early support. Grow VC is more than crowdfunding— it's an ecosystem where entrepreneurs can connect with experts, funders, team members, new customers and partners to realize their ideas.

  • MicroVentures calls itself an "investment bank for startups." It conducts due diligence on startups and then, if approved, helps raise capital from angel investors via its SEC-approved online platform, giving angel investors the ability to invest small amounts of capital to crowdfund a startup.

  • Angel List is a platform for startups—started by the dudes who do Venture Hacks.
  • CircleUp is an online marketplace that links accredited investors with consumer product and retail companies.


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