The future success of a startup has its origin in the entrepreneurial impetus of its creators and in an innovative business idea that can be demanded in a specific market. In his book “Becoming an Investor: The First 100 Days,” Farah C. Jaber talks about the key things that an investor should look for in a business. Farah also hosts The New Investor Podcast, a podcast where he shares tips and information for young and new investors on how they can grow their net worth.
Farah is the founder of Investors Media, LLC. It is an American media company established in 2019 and is headquartered in Delaware, designed to support young and new investors to start their journey to Financial Freedom. He is a hospitality management leader in his full time profession as General Manager for luxury hotels in Asia currently with Minor Hotels.
In addition to his approach to investing, the book and podcast documents his journey on developing his own media start up. He details that there are certain technological infrastructures such as open source software or cloud-based services that make it much easier for any business to be more economical in its construction processes, that setting it up is easier than one thinks provided you are passionate of making it successful.
On these processes of building a startup, we can differentiate several that will determine the possibility of your project and that in the end, will condition its growth.
On the above, most entrepreneurs request external financing to enlarge their business and in particular they do it to formats such as Venture Capitals, which are capital injections, in many cases, transcendental for the success of the project in question.
Thus, we ask ourselves, how can we attract the attention of potential investors and properly sell a business idea? What should the founders take into account to get the help of the Venture Capital?
Solid equipment and know how to sell
In the first phase we will call growth (the startup is new), the determination of whether to invest or not, usually has its main foundation in its human capital. In this way, it is necessary to convey precisely who their creators are and what their trajectory is. It is time to make clear who is the team capable of doing something current and attractive, focusing more on the message in the more qualitative than quantitative part of the project.
The inclination of investors will depend largely on the achievements and merits of the entrepreneur, so you should know not only those linked to work, but also others. It is important that investors also listen to the ability of the team to work and demonstrate results promptly.
It is also valuable to explain the way in which the team has been formed, whether they already knew each other or not. Affectionate relationships also decrease the risk of separation.
When the company has already defined its business model and the initial proposal, but it is not yet a practical business, the investment decision in addition to having weight on the equipment, will also have it on the coupling of the product in the market.
Therefore, it is necessary to define the reasons why it is believed that the product will have acceptance in the market and do it in a precise way, citing the possible beneficiaries of the product and what “problems” it solves.
Who is not able to explain your product well, is not able to carry it out successfully, so you have to be very clear to convey the ideas of the business and make it appear that it is not a passing news.
Markets with attraction
If the startup already has activity and its objective is to expand sales and strengthen its marketing strategy, the resolution of investing in companies will obey the financial characteristics of the business.
Many of the investors want companies that control their market and also have the capacity to be large. So the market has to be able to acclimatize to that magnitude. It is of consideration for an investor to see well-designed statistics that protect a business idea with arguments about why they access that niche market.
It is necessary that the startup has a good network of contacts that shows the potential of the team, being in this sense one of the most outstanding capabilities of networking. Venture Capital will not be able to examine with interest companies that do not have recommendations from other funds, business angels or other actors.
The founders of a startup that do not know how to remove themselves in the networks of Venture Capital themselves, will have little chance of being able to move in other essential contact networks for the company to develop and succeed.