By Jason Kulpa
Any time you get the opportunity to sit down and talk out your business vision is a win. That holds true whether it's with potential customers, partners, supporters or investors. Talking to people about your ideas is exhilarating.
However, seeking investment is a whole different story. The narrative in startup culture is that you need investment — as much as you can get, as fast as you can get it. It's the mindset that has spawned countless pitch competitions, even if the companies pitched are more idea than action.
But just because you can talk to investors doesn't mean you're ready. Investors are looking for specific milestones and markers. And if your business hasn't met them, you could be leaving money on the table.
Building a Strong Foundation
When I was attracting investors for my company, I learned some valuable lessons about what they seek in a startup. Before you dive headfirst into setting up meetings to attract funding, stop to consider whether your company has the following three elements:
1. The Right Team
Before your company seeks investment, you need a team of executives with an aligned vision for the company. TX Zhuo of Karlin Ventures says VCs often are more interested in a team that works well together than in an exciting product or service. While a fresh idea might seem like the most important element of an investor pitch, many know that without a team of driven individuals with complementary strengths who work toward a common goal, a good idea might not make it out of R&D.
I founded my company with a small but talented team who all wanted the same things for the business. Investors want unity among company leaders, so I put in the time and effort to make sure our team was fully in sync before beginning the search for investors.
2. Clear Core Values
After I had assembled my team, we decided early on that our company would be one that works hard to provide high-quality products and services while making time to celebrate and have fun together. These qualities were important to each of us as people and we didn't want to build a company with values that contradicted our own. And for us, it was important to find investors who aligned with these values and believed in our mission of both work and fun.
Having a set of core values is crucial to the future of your company. They will affect how you hire, how your office runs, how your staff members interact and how you communicate both internally and externally. They also play a large role in differentiating your company from your competitors — helping investors see the benefits of funding your company.
3. A Defined Market
Finding the perfect market for your product or service isn't just the key to your business success; it's key to attracting investors. Venture capitalist Marc Andreessen believes the top reason companies fail is that they aren't targeting the right markets. While the internet offers businesses access to much wider audiences than ever before, that doesn't mean everyone on the internet needs your product. Find and define a specific market for your offering or you'll have a hard time persuading investors to fund your business.
To put it simply, my company makes it easy and quick to buy qualified leads — and that service could be a fit for the entire B2B market. But I knew that if we set our target too wide, we would fail. After much research, my team discovered that a platform like ours would be extremely helpful in the insurance sector, so that's where we focused our energy. Once we chose that market, I knew we were ready to present to investors.
In today's world, it feels like everyone is an entrepreneur looking for funding. Investment money is available, but it's your job to do the hard work of building a strong company to set yourself apart from the competition. Before you approach an investor, first invest in your business and its future by nailing down the right team, a set of core values and a specific market. Startups with those strong pillars will have the foundation to see money come rolling in.
Jason Kulpa drives UE.co's business, technology, and products roadmap.