A lot of trust is involved in investing in early-stage companies. This trust is directed mainly towards you and your co-founders. If you are a famous founder – you can raise capital even with a back-on-the-envelope business plan, because you have a high credibility in the market. Not all founders have preceding reputation though. But there are some traits that can evoke trust towards you and your team even without having previous record with successful startups.
(Author: Stefani Bozadzhieva, Equidam / Image Credit: Mike Wilson)
There are several traits that we identify here:
1| Ambition and Passion
Ambition implies that your goal should be big. You need to be a dreamer and also make other people dream with you.
An essential part of entrepreneurship is selling your story. You should be displaying passion about the problem you are solving and how big your plans for the future are. This is a lesson you need to learn even before writing your pitch deck.
When you have an idea, it would help to talk it out with your friends and family. That way you can also build up confidence in yourself and your pitch. Building a startup takes years, so you need to be extremely passionate about what you are doing throughout the entire process.
If you are passionate and can transcend your enthusiasm, you are going to communicate the feeling of mission and urgency. This will help you trigger investors’ fear of missing out and thus boost the chances of you closing your funding round.
2| Resilience and Leadership
These two elements are correlated. Leadership is the ability to catalyze people’s attention and incentives to work with you towards achieving a certain goal. If investors see that you are the kind of leader they would follow, if they are caught by your vision, they know that your employees, advisers and customers will also follow you.
Let’s take an example: you are having a pitch presentation with investors. You start going through your slides and you get questions from investors. That is absolutely normal. Investors want to look behind every stone of your business.
However, you should be able to steer the conversation in your direction. If they interrupt you in the first five slides of the pitch with a question that you know is later on and it breaks the flow of your pitch, the natural response is to answer the question right away. Truth is, this signals lack of leadership because it means you are not able to take control over the situation.
Moreover, successful founders are focused and resilient in their idea. Ask anyone and they will tell you that the only reason they made it is because they didn’t quit.
Following the example from above, resilience also means following the initial path or flow of the presentation you have prepared.
As an entrepreneur, you will be rejected plenty of times. Resilience also means taking the investors’ notes and working hard to improve before going back to them and presenting again. That is also a way to build relationships with investors and earn their trust.
Finally, leadership is not a feature of one person, it is rather a feature of the whole team.
For instance, you go to a meeting with investors and the CEO is doing all the talking and the other co-founders seem more passive and not answer any of the questions. This can actually be harmful to you because it could be a signal that the team is not cross-functional and that team members do not complement each other in terms of skills. You need to present balance withing the team.
To initial introductory meetings with investors, it is always best to take only the employees or founders that are the best in speaking and presenting.
If you are not able to express clearly and understandably your value proposition and your investment proposal you are most likely going to lose the deal.
Watch out for recurring questions, because this means that this is a topic investors do not understand. The key here is to express the complexity of your idea and explain it as simple as possible. This is also how the elevator pitch came to existence.
One way to test your ability to explain this easily is to talk to people who are not familiar with the industry that you are operating in. And to be honest, if you can explain the concept of your startup to your grandmother, then you can explain it to everyone.
Some empathy is involved – you should be able to adjust the language you use, depending on who is in front of you. For instance, some people completely understand your idea right away. Then do not prolong the pitch, speed it up.
In other situations, when you see people are not understanding you well, take a step back and try to explain the concept without using too complicated tech terminology.
4| The team
It takes a team of exceptional people to build an exceptional company.
There are different theories on the right mix of founders, but the truth is you should know each other beforehand. If you have just met, most likely people are not going to trust you will manage to go through the hardships of entrepreneurship.
Likability refers to moral, ethics and decency. Investors are not going to work with you if they have doubts about your character.
Final remark – just be you. You should learn how to get the best out of yourself, rather than try to be someone else. Learn what it takes to show the best qualities you have and find your own formula.
What about your experience with pitching to investors? Were you able to get an investment right away or did you have to work out another strategy before trying again? Let us know in the comments!