What Does It Take to Be an Entrepreneur?
Considering whether or not to start your own high-tech business? You'd better be ready to raise some money. What do VCs and other investors look for when investing? A good business plan, sure, but what else?
WetFeet interviewed entrepreneurs about what it takes to succeed and investors on what they look for when they invest in a startup. Here's what they told us is the essence of what you need to create a winning company.
Your excitement has to be intoxicating enough (above and beyond your business plan and excellent idea) to make others believe in your dream just as much as you do. This is the key to finding great employees, connected board members, and generous funders.
Once you become an entrepreneur, you're on 24-hour call selling the concept behind your business, its viability, and its future. A convincing case can only be delivered by a true believer. Investors don't want to fund greed. They want to fund a revolution-your passion will make the difference.
A Winning Team
Want funding? The quality of your management team will make or break you. Your top employees' credentials show that you're ready (or not) for whatever the economy, markets, or the competition throw your way. Your team also needs to be flexible-able to adapt to wherever the company's growth takes you. This is particularly key in the seed-capital phase when investors bet on unproven concepts based on their gut feelings about a team.
That's why you'll need to fill out core positions before you meet investors: CEO, engineer, and marketing. The other crucial reason you need to put together a cohesive and talented team is the long hours you'll spend together.
The Big Idea
Your concept needs to be different and useful. Investors want to fund firsts, not variations on a theme. They also want to fund winners: companies positioned to get major market share (a first-to-market story is always good). Best-case scenario: your idea is defensible-difficult to duplicate or compete against (like patents).
Become an industry expert, verify that no one else is in your way, and find out what's kept others from your breakthrough. Master your competitive landscape and environment; show how your company is bound to benefit from economic and market trends. You also need to need to have a sense of what's ahead on the horizon, and that your business isn't about to become obsolete. Before they fund you, investors want to know you know all the angles.
The Business Plan
It shouldn't just talk about how you'll start your business, but how you'll grow it and make your investors money. Four out of five entrepreneurs agree: The executive summary is the single most important component. Boil your plan down to a clear two-page document that hooks the reader in.
The next step is the management team description-your team's experience and track record should comfort investors. Honest financials also make a difference-a complete competitive analysis and reasonable assumptions should support your claims. Breezy optimism is a turn-off.
Finally, show your investors the money-build in a credible exit strategy (either acquisition or IPO) to make the investment worthwhile.