Working on a tech-oriented startup project, it’s easy to bury yourself in the data models and logistics. But spending so much time on the specifics of your project can quickly distract you from other considerations that might make or break your first attempt to gain funding.
When you begin looking for venture or angel investment, you are putting the entirety of your life under the microscope. Whether its your past work experience or your decisions in your personal life, every facet of your character is going to be evaluated.
There are a few distinct qualities you are going to need to cultivate now if you hope to have someone else’s money bank rolling your success.
Before you stand in front of several highly scrutinizing people who are considering taking an enormous risk on your business, it’s important to understand where your personal skills and weaknesses are. If you don’t, you can expect to quickly be made aware of them.
Grit and initiative are often valued as key qualities for an entrepreneur, but you can take a can-do attitude so far that it becomes blinding. From start to finish, it’s essential to be realistic about how much you can skillfully accomplish within your venture. If you are a technically minded person, chances are that you do not have the sales or operations experience another individual might. If that’s the case, it’s time to find someone else to join your leadership team that can make your product do more than sit on the shelf.
If you’re uncertain of exactly which areas you will need the most help with, this might be the perfect time to lock down the first member of your board of advisors. A good board member could not only help you determine what you’re lacking, but also be able to make introductions to potential partners to fill these gaps.
Ralph Waldo Emerson said, “Most of the shadows of life are caused by standing in our own sunshine.” In preparing for your business pitch, it is critical to determine what shadows you’re not seeing. Should you fail to know your own shortcomings and address them, there is a good chance you will also fail to find funding.
Trust is an enormous component of investing. Regardless of whatever fail-safes an investor places in your company, they are still taking an incredible risk on you. If you’re the lead entrepreneur for the company, your integrity reflects the company’s integrity.
There are two types of integrity: integrity in the sense of morality, indicated by the correctness of your actions, and integrity in the sense of consistency, indicated by a lack of contradiction between your beliefs and actions. As an entrepreneur preparing to receive a lot of attention, you’re going to need both.
With the growing number of stories coming out about gentleman like Bernie Madoff or Tom Petters, everyone has started to be a little more concerned about who they are giving money to. Knowing that a good liar will even deceive their friends, your potential investors are going to be looking at the little things.
Consider the last time you went 18 holes and there was a spot of money resting on the outcome. Were you willing to bend the rules slightly to put the odds in your favor? Did you drop a ball a few feet or more in front of where it technically should have been? If you tried this with a potential investor who pulled the plug on your deal, you might have just discovered the reason why.
Demonstrating your integrity requires more than just being an honest golfer though. It’s about consistently holding yourself to a standard. Bluntly, if you claim a certain set of principles with your speech, you better be walking within those bounds. If you’re espousing something that you’re not acting on, you’re only making it more difficult to believe that you’re a stand up guy.
Most investors would agree that a bad deal carried out with a good person is far more likely to succeed than a good deal carried out with a bad person.
No integrity equals no trust. No trust equals no deal.
III. Simple Business Acumen
The expectation that an entrepreneur would come to understand the basics of running a company seems like it shouldn’t need to be mentioned. But there are countless product creators who view the operations side of a venture as somehow less important than the R&D. There are also countless fantastically innovative ideas that disappear every year.
As stated before, not finding the right mix of skills to fill out your leadership team is a certain path to failure. However, simply letting your partner handle the “boring business elements” can be just as grave a mistake. Regardless of who joins your team, you will find yourself more informed on the company’s progress and far less likely to be made irrelevant in the company’s future if you educate yourself on the basics of business operations.
At the very least, you will need enough business fluency to gracefully pass investor’s questions off to the correct member of your team. Send a financial analysis question to your marketing guru and you’re not going to help anyone’s credibility.
The process of taking a startup from start to finish is a learning experience for even the most experienced serial entrepreneurs. As a technical CEO, taking the time for a little introspection at the beginning of the process will insure that learning the lessons of an entrepreneur won’t be quite so painful.