What are investors looking for in a founder?
I’ve written in previous articles about how, when you’re pitching for VC investment, you need a great idea that can dominate a big enough market, then articulate it clearly. It’s a tough ask and not many founders manage it. However, it’s not just your idea your prospective investors are evaluating. It’s you. VCs aren’t just looking at the horses, they’re looking at the jockeys too.
When a VC is listening to your pitch, there are few questions running through their minds about you. If you can demonstrate a positive answer to these questions, maybe, just maybe you have a chance.
Question time
Here are the 4 questions investors are asking themselves when you’re pitching to them:
- Why has this founder chosen this particular business?
- How committed is this founder?
- What are this founder’s chances of succeeding in this business, and in life?
- What is this founder’s unfair advantage?
An investor is looking for a return on their investment, whether that can happen lies with the founder. An investor needs to know the founder is capable of providing this ROI. If you can demonstrate a strong argument that your affinity with your idea and your business will lead to long-term success, you may win.
Anything else?
Of course, that’s not all. Investors are looking for other signals too:
- Common ground – Investors want to work with people they understand and get on with. They’re looking for shared experiences. For example, many founders are introduced to potential investors through mutual connections. Investors may want to know how you know them, and what you think of them.
- The A-team – While you’re the founder and the ultimate responsibility lies with you, investors want to see a strong team behind you. They want to know about your co- founders, your current company structure and your hiring plans for the future. Who is next to join your company, or will you go with a different strategy such as outsourcing?
- Patience – While it’s true that most VCs want a quick return on their investment, this isn’t always the case anymore. In the deep tech age, it can take as long as 15 years to build a company. Are you in it for the long haul? Do you have the patience to go all the way, through the highs and lows? Most importantly, can you show your potential investors that during your pitch?
How to give them what they want
Now we know what your VCs and investors are looking for, how can we make sure we give it to them? Here are some ideas:
- Evidence – Give your investors something they can take to the bank, strong evidence you’re as good as you say you are. You hopefully have numbers to demonstrate you have a handle on the financial side of things, but what about the non-quantifiable side of things? Testimonials from happy customers are a great way of showing that you can relieve your target audience’s pain.
- Confidence – Make sure that during your pitch, you present confidence in what you’re saying. As nervous as you may be, you need to show that you’re completely at ease with yourself and your business. Some people are naturally more confident than others, so preparation is key here. Make sure you know your pitch back-to- front, and you’re ready for any questions the VCs may have. Don’t let yourself be unexpectedly surprised.
- Your team – As noted before, your investors want to see a strong team behind you, so show rather than tell. If you can, bring them with you. Let them demonstrate the strength of your business.
One shot
At the end of the day, you only have one chance. Meetings with VCs are hard to get, so don’t waste this opportunity. You need to be as good as your idea, so prepare hard for success.
What do you think? What advice do you have on how to demonstrate that you’re a founder worth investing in? Let us know in the comments below.