Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about
what startup investors look for in entrepreneurs before investing. Let’s face it. There are
many different factors that come into place for an investor to get excited, for and investor
to understand the vision, and to understand the future that entrepreneur is creating.
In today’s video, we’re going to provide some key insights that you could use to understand
and to get some of those patterns that are going to make that trigger in an investor
to go ahead with making an investment. With that being said, let’s get into it.
The first thing is, they like founders who are able to build a great team around them.
The thing is that in Jim Collins’ book, Good to Great, he always says that a startup
is like a bus without a direction, but if you have the right people seated on the right
seats, eventually you will find that direction to success. That’s the same thing with startups.
The investors want to know that you can recruit a team of A-players, and typically they would
see as a red flag if they see a solo founder because that could signal the fact that they
were not able to sell their vision enough to convince someone else to join them in that
journey. It’s all about being able to delegate, being
able to get people that are better than you, and that can execute on that, and that can
bring something to the table. Essentially, this is something that the investor is going
to want and is going to require in order for them to potentially make an investment.
The execution is a really big one. The minute that you meet for the very first time with
an investor, it’s rare that they’re going to give you the check. So, you’re meeting
with them Day one here, and over the course of time, you’re giving updates, and you’re
telling them how you’re doing, how you’re executing some of the feedback that they gave
you and how you’re implementing it. Then over the course of time, they’re going
to be able to see that you’re delivering on your promises all those different things
that they told you. They can see that you’re listening and that you’re applying them.
Then all of those different factors or ingredients are going to help them understand that you’re
really good at the execution, which is going to give them that assurance toward making
an investment. Remember as well that at the end of the day, 5% is going to be the idea,
and 95% is going to be the execution, which accounts ultimately for the success of a business
concept or venture. Founders that know their customers: This is
another big one of investors. You’re going to see it when you go to meetings. They’re
going to want to hear about your customers, what you know, what kind of data, what kind
of information, what you’ve learned, what they like, what they don’t like, what do
they look like? Those are all different things that you need
to know because it’s all about understanding your customer, and if you really understand
your customer, then you’re going to be able to bring or deliver a service that they want
and need. That essentially is what investors want.
They want the entrepreneur to be able to build something that has product/market fit. What
that means is something that is literally flying off the shelves, something that is
addressing a specific need in the market, and is something that is going to help the
investor determine that you’ve done your homework, that you know your customers, and
that you’re giving them exactly what they need.
Expertise: They want to know that you know the market that you’re dealing with, that
you’ve done your homework about it, and that they’re not giving you the money to
make the mistakes. They’re giving you the money to execute. That’s something that
investors want and that for them is going to be a super big one. So, when you’re getting
in front of them, you really need to convey why you and your team are the right team to
execute this idea and what you have done in the past that gives you that edge for the
execution and to bring this venture to the finish line.
They want a very big market. They want to invest a company that is potentially taking
on a really big market, and those need to be 1 billion dollars and up. Anything under
a billion is probably not going to be of interest because ultimately you need to understand
that whatever that market is, even if you had the best idea, and the best execution,
and the best team if the market is small, that is also going to determine the returns
of that investor. With that in mind, you want to be in a market
that is really big, that has the potential for great disruption, and that is going to
create a great excitement with those investors that you’re targeting because they can see
that if you execute well, then perhaps their returns are also going to be super meaningful
and are going to justify the risk of investing in your company.
Being able to adapt: This is another really important one because this is going to tell
the investor that you’re able to listen, that you can listen to your customers, that
you can listen to them, that you can listen to your employees. You need to adapt because
essentially what you’re bringing to the market – maybe that business plan or that
pitch deck that you had put together one day, thinking that it was going to be a massive
success, ultimately, you put it to the market, and you realize that it needed some tweaks.
There were certain things that you did not understand, or you didn’t know were there,
but that by listening to your customers, you understand how with one or two tweaks are
whatever is needed, you’re able to adapt, and you’re able to completely reinvent whatever
you’re doing and perhaps even completely reinvent yourself or whatever your offering.
I think that being able to adapt is a critical one, and then, in the end, essentially being
able to listen too. Focus: This is another one that is super important
because the thing about entrepreneurs is that you’re always thinking about what the future
is going to be. What can you bring to that problem that you’ll solve? What kind of
solution? The problem is that when you start thinking too big or when you start to get
other distractions, that is going to be a red flag.
Always, as an entrepreneur, start by not building them all first. You want to build the store
first, and then you build it over time to become that big mall or that big idea that
you have. But you need to always think big and start small. That is going to give that
assurance to the investor that you know how to focus and that you’re going to be crazy
about execution on those milestones that you’ve already outlined.
They also want to see the sense of urgency and the passion there because here’s the
thing: you need to be crazy, like crazy obsessed with your business. It’s night and day.
This is not like a title; it’s not a job; it’s a lifestyle. You’ve come across a
crazy problem that frustrated you. It all started with a personal story of yours
and how you brought that to life to address with your solution that problem that you were
seeing. It’s all about your personal story. It’s about how passionate you are about
that, and that is something that is going to come across during your discussions.
So, again, and again, and again, make sure that you’re showing that you have that passion
for whatever you’re resolving and addressing and that you’re able to talk about your
why – the why of how you brought this business to life because that is, in a sense, what
is going to give that idea to the investor. With that being said, hopefully, you liked
this video, and if that was the case, hit the Like button. Also, leave a comment and
let me know what you’re up to. Then, as well, subscribe to this channel so that you
don’t miss out on any of the new videos that we’re rolling out every week.
Then, take a look at the fundraising training, which is the program where we help entrepreneurs
from A all the way to Z with everything related to fundraising. There, we have live Q&As,
templates, agreements, a community of founders helping each other all over the world, and
I think that you would find tremendous value in it. With that being said, thank you so
much for watching.