What Most Entrepreneurs Don’t Understand About Investors

What Most Entrepreneurs Don’t Understand About Investors

You need more than just good ideas.

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s the best way for young startup owners to develop relationships with angel investors?” is written by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.

For young startup owners, the ability to develop relationships with angel investors can have a significant impact on the future success of your company. A good investor provides wisdom, counsel, connections—and most importantly, money—to launch your startup into new areas of growth.

While most entrepreneurs understand the value of partnering with angel investors, they often miss the most important aspect of it: alignment of cause. If you make it just about the money, you’re setting yourself up for failure. Investors have people asking for money for business ideas all the time. What they don’t often encounter are people who have a cause behind their pitch.

Here are a few tips on how to successfully navigate pitching to, and partnering with, potential angel investors:

Appeal to the brain
Your idea has to make sense and make a profit. This may seem obvious, but you’d be surprised how many entrepreneurs don’t have an elevator pitch for their businesses.

While cause is important in generating enthusiasm for the “why,” your business still has to make monetary sense to investors. Just like you, investors are looking to grow and expand. And the simple truth is this: You can have the best cause in the world, but if there is no profit in it for investors, you’ll be going it alone.

A good idea is not enough. Make sure you have a coherent and comprehensive strategy as part of your presentation before walking into a room full of potential angel investors.

Appeal to the heart
Your business has to contribute to a greater good. Like the rest of us, investors go home happy when they know the work they’ve done is making a positive difference.

Give some brief insight into how you were first stirred to take up your cause. Give statistics and stories that show how the mission your company is undertaking is a noble and worthy one.

If your company’s work doesn’t explicitly serve a cause, that’s okay. Talk about the work you do on the side. Discuss charities and groups that will benefit when your business does. There are a lot of ways to show that your company is making the world better.

 

Remember it’s a partnership
The other piece of finding investors to work with is discerning for yourself how healthy the partnership would be on your side of things. Make sure that you find like-minded people who are passionate about the same causes you are. Not only will they be more likely to invest financially, but they can serve as great resources for advice and discernment.

If you just try to pitch to those with the most money, you’re giving your company away to people without knowing their intentions. The best way to ensure that both you and your investors have a mutually beneficial and lengthy partnership is to make sure that everyone is aligned in vision and cause.

Pitching your company in hopes of partnering with angel investors can be a difficult and nuanced task. But the end goal is simple: Be on the same page when it comes to strategy, goals, vision, and most importantly, cause. When an investor looks at your business and sees an opportunity to grow financially while being a part of something bigger, you know you’ve done your job.

 

[Fortune]

May 8, 2016 / by / in , , , , , , , ,

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