Top 3 things early-stage entrepreneurs should sort out before talking to investors
Tips for innovators looking for investment
Published on December 8, 2020
Takeaways from an interview by Holly Ann Baldwin to Fran O’Brien, Head of Clients & Investors at SyndicateRoom (December 2020)
Early-stage entrepreneurs are often intimidated by investment. The factors that make fundraising successful are multiple, including a solid business plan, competitor analysis, and a wide network of business professionals in the market where you intend to operate. Yet, if we were to pick the top three elements that can increase the robustness of a business case in the angel investment phase, what would these be?
1. Potential customers
Successful businesses fill a gap in the market. This is a prerequisite that any investor will expect from entrepreneurs at any stage of their ventures. However, when approaching potential partners for investment, you should go one step beyond simply demonstrating market need: you should show that people are ready to pay for your product or service. You should provide evidence of this having met your potential customers and understood how much they would be willing to pay for your product or service. This will (1) give investors the impression that you know what to do after securing investment; and (2) it will show that you already have potential clients waiting for your product or service to enter the market.
2. Unit economics
Showing realistic calculations of the costs associated with developing and launching your product or service helps investors project revenue and estimate how long it will take for your company to become profitable. These basic calculations are at the heart of your investor’s interest.
When assessing your unit economics, you should consider both the physical and human elements that you will have to pay for, including outsourced services. While no investor will hold you accountable for projected vs actual expenditure to the unit, a firm understanding of the things you need to pay for will show that the amount of investment you are after is appropriate, increasing investors’ trust in your pitch.
3. Dream team
Even at the early stage of a business project, it is unlikely for an investor to trust a venture entirely driven by single individual. When approaching potential investors, it is highly recommended to show that you have thought about the skills you need to grow your business, launch it, and make it successful.
Even if you have not hired anyone yet, you can sketch out the profiles of your ideal core team members. This will enable investors to envision the type of team they would be funding, giving them additional elements to evaluate your project. If you have already started working with trusted collaborators, you can introduce them to your potential investors, increasing their confidence in your ability to select qualified personnel to grow your project.
Securing investment requires patience, research, and a firm understanding of the different types of investors available in the market. At Oxentia, we work with research entrepreneurs from different walks of life and at different stages of their ventures, from ideation, to business planning, investment, and launching. Our mission is to continue to introduce innovators to investment opportunities and delivery partners to ensure that game-changing ideas are commercialised for the good of societies around the world.
For more tips on how to make your fundraising successful, watch the recording of the webinar Are You Investment Ready?
Would you like to see more online panel discussions on early-stage investment? Reach out to us at firstname.lastname@example.org. We would like to include your questions and insights in our upcoming interviews with investment experts.