CTRINE VENTURES’ INVESTOR GUIDE — PART 1 of 2
Starting a new business? Looking for capital? You’re not alone. Thousands of start-ups all over the world seek external funding for their start-up endeavours every year. Building and scaling, especially in the technology space, is expensive and unfortunately not all founders have the requisite capital in their bank account or network to bootstrap their business.
We’re here to tell you that IT’S OK. It doesn’t mean the end for you and your world-changing idea. Good thing for you, there are many different avenues for securing external funding — Angel Investing, Venture Capital, Government Grants/Loans, Crowdsourcing and Cryptocurrency, to name a few.
We know you don’t have time to read a long article on how to secure funding for your business — you’re too busy keeping it afloat! GO YOU! So here’s a short article on what different investors are looking for. We’re just hitting the high notes here so if you want a more in-depth analysis, hit us up on social — @CTRINEVENTURES (Instagram) @CTRINEV (Twitter) — or send us an email (details below).
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Now let’s get started with some very basic, but important advice:
CTRINE’S SECRET TIP 1: Know your audience. Tailor your pitch.
The number one takeaway from this article should be this — KNOW YOUR AUDIENCE. TAILOR YOUR PITCH. Each funding channel we’ll address, is looking for something very different in a business investment. As you read through this article, carefully take note of what each investor is looking for and when you meet with them, tailor your pitch to directly and clearly address these needs. For example, if local, high paying, secure jobs is their concern, make sure you speak to that directly — i.e. “We will bring X number of jobs to this region by X date. The average salary will be X and our plan is to keep the office here indefinitely for long term job security.” Directly calling out their core needs will make it much easier for them to make a decision. It will also show that you’ve done your homework — very important!
CTRINE’S SECRET TIP 2: Your business is an investment.
When securing external funding, it’s important to remember that your business is an investment to them. Just like typical investments/investors, they are looking for something specific — high returns, fast returns, stable growth, exponential growth, etc. It’s important to address your business’ brand as an investment. Are you a stable investment? Risky but high potential? All very important for a potential investor. Certain funding channels like certain growth trajectories (we will review below) so based on your business model, your business may suit a certain type of investment channel more than others. Research each funding channel and decide which channels your business model is best suited for. This will give you the best chance at success.
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OK. It’s time to get into the nitty-gritty. What do investors look for in a business investment? Part 1 of 2 — Angel, VC and Government Investment.
ANGEL INVESTORS: What are Angel Investors looking for?
Where does the money come from?
The Angel themselves. They’re typically very high networth individuals.
Type of person?
Angel Investors are unique in that they typically have entrepreneurial experience themselves and have a vested interest in certain industries. Whether it be finance, tech, healthcare or the environment, Angel Investors typically look for well-managed, well-structured businesses that resonate with them personally.
What do you need to appeal to?
The Angel themselves. Since it’s their own money on the line, you need to appeal to one or more of the following “Angel Lenses” to be successful: economic interest (a good business investment), hedonistic interest (they like the business idea personally) or altruistic interest (they like business for the betterment of humanity).
SUMMARY: To appeal to an Angel, you need to appeal to one or more of the three “Angel Lenses” above. To give yourself the best chance, you should be a good economic investment at the very least (I hope you’re one or else you’re going to find it VERY hard to receive any external funding). Know your Angel before going into the meeting. Study their career, their interests and past investments. Tailor your pitch to the Angel. You’ll be spending a lot of time on that Google machine but all of your research will pay off when you’re in the boardroom. Trust us on that one!
VENTURE CAPITAL: What are Venture Capitalists looking for?
Where does the money come from?
Investors. VCs are investing money on behalf of others. They are taking other people’s money and tactfully investing it in start-ups as risky, high-potential investment. Because of this, they have a fiduciary duty to their investors to make good decisions.
Type of person?
It can vary from person to person but they are all investors. Business people.
What do you need to appeal to?
Unlike Angel’s you can’t appeal to them as individuals or to their emotions — for VCs it’s all about business and finding the right investment for their investors. Generally, they look for two key things in a business before investing: 1) “Hockey stick”- like growth (strong exponential growth curve) and 2) A strong exit opportunity (liquidating the investment).
SUMMARY: When going into a VC meeting make sure you clearly outline your business plan. They need you to prove that you’re a good investment by illustrating your sound financial plan (sales history, projections, profit margins, debt, annual expenses, etc.) and marketing strategy. As investors, they typically look for high growth and an easy/lucrative exit so if you can illustrate that your business will be bought out quickly or will scale very fast — that is appealing to them. Make sure you address the growth curve and exit in your presentation. If you don’t they’ll probably ask you in the presentation and you don’t want to get caught off guard!
GOVERNMENT GRANTS/LOANS: What are Government Investors looking for?
Where does the money come from?
You — the taxpayer. Or sometimes private industry investment if they’ve partnered with a private enterprise on a specific program.
Type of person?
It can vary from person to person but often the panel is composed of government officials, government employees and private sector investors (often VCs donating their time).
What do you need to appeal to?
The public. Since this is public money, you need to demonstrate that you’re going to help society with your business and their investment. When pitching a Government Investor or applying for grants/loans, you need to demonstrate two things: 1) You’ll create jobs — high paying, secure jobs ideally and 2) You’ll contribute to GDP. If you can demonstrate that your business will grow, be around long term and create jobs, you’ll be in a great place to secure government funding.
SUMMARY: The Government is looking for sound, well-managed businesses that will be around in the region for a long time, creating great jobs and GDP. If your plan is to get bought out by a foreign company and relocate all jobs and GDP across the globe, government funding is not the best route for you. Something else to note is that Government often values certain industries — healthcare, education, energy and environment are the most popular sectors. If your business falls within one of these industries, government funding could be a great option for you!
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Here ends Part 1 of 2 in our Investor Guide series. Next time we’ll discuss Crowdsourcing and Cryptocurrency. Exciting stuff!
Now that you have some tools in your toolbelt, it’s time to get to work! If you have any questions or need help kick-starting your investor search, reach out to us on social or send us an email. We love hearing your stories and helping businesses bring their vision to life!
CTRINEVENTURES.com || @CTRINEVENTURES || GetStarted@CTRINEVENTURES.com
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CTRINE VENTURES is a full-service marketing and communications company that specializes in providing world-class and affordable marketing support for start-up and scale-up businesses around the world. CxV partners with true innovators and disruptors across all industries. From Tech to Wellness, we work with the most talented, creative and open-minded hustlers who are exceptionally passionate about their industry, their business and making a real impact. We’re currently accepting new clients. Let’s change the world together!
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Read this article on Medium here.
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