While it’s no secret that there are a lot of hungry entrepreneurs out there trying to get their hands on growth capital, there are a few simple ways you can separate yourself from the pack. Before you launch your next financing campaign, be mindful of these four steps to getting your early-stage growth company fully funded.
1. Start Months in Advance
Give yourself plenty of time to plan the campaign, create top-notch content and coordinate the launch date. The growth leading up to the campaign can be argued to be more important as the growth during the campaign itself.
2. Understand the Customer/Investor
Do your best to narrow your market down to as small as you possibly can. Envision your ideal financing partner and try to find people or organizations that fit that image. If possible, send out testers before pressing the start button on your financing campaign. Early tester feedback should be a big decider on your strategy ahead.
3. Offer a Lifetime Perk
Offer your potential backers a lifetime perk. Maybe it’s free membership for life, or a lifetime supply of a particular product. It doesn’t have to be big, but these perks can go a long way in closing deals that are otherwise sitting on the fence.
4. Focus On Your Goal
Write out and plan your entire financing campaign before you start anything else. Be organized and be ready for adjustments when necessary. Set your goals and don’t lose focus.
Culture is a bit of a buzzword in the business world these days, and for good reason. There’s no surprise in the success of businesses like Virgin and Nordstrom — corporate culture is a humongous focus in the boardroom. Before you invest and partner with a company leader, take a look at these three keys to identifying good corporate culture.
What is the “why” behind the “what” in the business? Having a purpose constitutes vision, and having a vision enables passion. Before you invest in the next Mark Zuckerberg, make sure he or she has these not always inherent qualities. This kind of attitude often has a trickle down effect — before the troops can be motivated, they must be led properly by their general.
More than ever, the ability to turn on a dime is crucial. Twitter once was a destination to find and subscribe to podcasts, Starbucks once exclusively sold espresso machines and coffee beans. Nokia made its earliest cash by churning out paper, Flickr was nothing more than a role playing game. At some point, these company heads decided it was time for a change. Be sure your partner CEO is open for a pivot if necessary.
3. Empowered Employees
Richard Branson once said “Take care of your employees, they’ll look after your customers. It’s that simple.” Finding that impeccable customer service is simply found by giving employees authority and responsibility. As Nordstrom’s employee handbook famously reads “Our One Rule: Use good judgment in all situations…” This kind of treatment breeds loyalty, which in turn lowers staff turnover.
The gates swing open and off go the horses. When you invest in a early-stage growth company, there are a lot of variables to consider, but at the end of the day, you want to make sure you have your dough on a well-trained thoroughbred. To help you do so, here are four amazing traits to look for before investing in a founder.
1. Owns Failures
People often avoid owning up to a mistake or failure, but if you’re about to saddle up your dollars with a company, make sure the founder is not one of these people. A good entrepreneur will never say “it’s my VP of Engineering’s fault.” Rather, they will take responsibility and truly learn the appropriate lesson and move forward.
2. Demonstrates a Sense of Fair Play
Scaling a business will put everyone involved in exciting, yet high-pressure situations, The most damaging thing a founder can do is to leave his own team hanging. The founder needs to step up to the plate as much if not more than the rest of his squad. It puts a very sour taste in the mouths of employees when they are asked to report at the office seven days a week with the founder nowhere in sight.
3. Has a Strong Sense of Economics
All good founders will have a strong sense of value exchange. When negotiating deal terms, a founder should ask what’s in it for me, and ask what’s in it for the other players. If the founder has a sense for win-win situations, you can almost be sure he/she has a shot to be competitive in the marketplace.
4. Not in Love With Their Idea
It sounds counterproductive on the surface, but markets and technology change all the time. What was great yesterday may no longer be great today. You want a founder who can keep an eye on changes and make the appropriate adjustments. So have doubts and challenge them each day.
It’s not an easy game to play. Startup winners can elude even the brightest of minds, but if one does manage to uncover the next Uber or Pebble Watch, that discovery can lead to significant high-yield returns on their investments. Here are five things you need to know before you find your next growth capital home run.
1. Stay With What You Know, Take Calculated Risks
The best way to reduce risk is to understand what you are investing in. That understanding will be able to provide invaluable insight to the mechanics of the business and the investment itself. Make sure that the business has a scalable model so that it can grow to a level in which you will be able to get your money back as an investor. Long-time startup investor Kevin O’leary of Shark Tank says “I like to take risks. That’s how I make money. But they are calculated risks.” Take risks — without them, there’s no reward. But refrain from dumping dollars into something described as a sheer gamble.
2. Look For Founders Who Compliment You
By in large, a startup business is only as reliable of the people running the ship. Drill into the founders’ backgrounds and get a sense of the kind of people you are working with. What’s their educational background? Previous companies? What can they bring to the table as a person and a professional? At the end of the day, you need to be able to trust the people you are investing in. The road to wealth if often not forged alone and as such, a smart investor will not only look for partners who can compliment their knowledge and skill set, but also compensate for any weaknesses they may carry.
3. Join an Equity Crowdfunding Platform
If you are having a hard time finding a good investment prospect, a good fix is to join an equity crowdfunding platform. By doing this you will be able to navigate through different deals and different industries. Referring to the first point – It is important to learn about the market before making any type of investments.
4. Be Involved, Pay Attention
As an investor, you need to understand what, why, and how the startup intends to spend your money. This will give you a better sense when testing the founder’s vision. Also, review the salaries and see how much the founder intends to pay himself/herself. Understand if the money that the startup is raising would be enough to accomplish logical business checkpoints and milestones – this is a must. Furthermore, this due diligence will keep you, the investor, involved in every leg of the race. The more you pay attention, the more likely the startup grows, the faster you see returns on your investments. Yes, the capital is important, but don’t downplay the value of your action and advice.
5. Explore the Market For Acquisition Prospects
It’s impossible to see the future, but as an investor, you should do everything you can to try to do so. It’s crucially important to see what competition the startup has. As the investor, you need to know what the competitive advantage is (if any) over the marketplace. A competitive company could acquire the startup instead of mimicking their work, so investigating the hunger in the market could be beneficial. If there is competition, look at merger and acquisition history to understand what you and your money are up against. Knowing this will allow you to better plan for future funding and how you can be involved if you choose to be.
You’re an early-stage growth company and it’s time to raise some capital. While it has never been easier to get your business out to the investing masses, the competition never been more intense. Before you set out on your fundraising journey, take a look at these six tips to successful crowdfunding.
1. Video is Crucial but it Isn’t Everything
Make no mistake, your video demo is the most important part to your crowdfunding campaign, but also be aware that it’s not a good idea to poor all your resources into the demo alone. Set a budget for your demo and stay within it.
2. Put More Focus on Story, Not Quality
Sure it looks nice to a polished demo on screen, but good cinematography won’t win investors over alone. Focus on a good story and really sell yourself. In this business looking are not necessarily everything.
3. Pass the ‘Mom’ Test
If Mom won’t buy it, chances are outside investors won’t either. Furthermore, it’s a good idea to go into a crowdfunding campaign with some backing to lean on – even if it is just from friends and family. Do your best to put some money in the bank early.
Encourage everyone to share your content online in exchange for a discount or a free product or service.
5. Set Achievable Goals
Set reasonable goals that you can quickly reach – it establishes credibility early on and provides momentum. Set a target you can reach within 24 hours if possible.
6. Mobilize your Targets
Before launching your campaign, it’s a good idea to get together an extensive email directory together. Most money you acquire is going to come from investors who hear about you via email.
This is the time to be an entrepreneur. Never has it been easier to register a business, engage the public and perhaps most importantly – raise money. Thanks to the (rather sudden) rise of the FinTech marketplace, thousands of entrepreneurs are able to participate in a streamlined lending process that’s no longer bogged down by tedious paperwork and idle time. Here are three FinTech Developments that will continue to benefit borrowers in the long run.
1. ALL Generations Are Now Embracing and Relying on Mobile Tech
From checking weather reports to doing some last-minute holiday shopping, we are using our mobile devices for virtually everything. Thanks to FinTech, we can now lend and borrow just as conveniently. The nine-to-five banking and financing days are all but completely minimized. Most early-stage growth companies are strapped for time, but their need for financing is arguably greater today than it ever has been before. Businesses are looking to skip the chit-chat and use their time more efficiently – especially Millennials.
2. Despite Looming Interest Rate Hikes Ahead, Entrepreneurs Will Still Seek Capital
Entrepreneurship is not going anywhere. Furthermore, higher interest rates make it more profitable for conservative lenders to open up the purse strings. When lending is profitable, banks will provide capital. This is likely to cause a significant spike in fundraising interest in general and businesses will listen to all options on the table.
3. The Industry is Retooling and Becoming More Reliable
Despite scrutiny, the FinTech industry is without a doubt working. Growth companies are receiving funding and lenders are being rewarded with hard profits. It’s a great time to be a borrower. Costs are lower for lenders and for borrowers, and capital is absolutely available. Loans are being processed more quickly than ever before. We are long past the 1950s way of banking and we’re never going back. The FinTech marketplace has also proven to be a great alternative for under-served communities and minority-owned businesses.