Venture Capital and Startups, how can you demonstrate promise before you even start searching for funding
26 October 2018
7 min read
Within our own startup accelerator, we’ve seen that reaching the Venture Capital stage is a momentous step for any startup, and one that can’t be taken lightly. You might only get one shot at impressing any given firm or private investor — leave a bad impression and you’ll need to start looking elsewhere. That’s why it’s essential that you prepare as thoroughly as possible before floating your business in relevant networks.
Think about it. If you can’t currently make a strong case, why attempt it and end up getting overlooked when you can simply take the time to strengthen your case significantly and step up to the plate when you’re ready to close that deal?
If you want people to invest in you, you need to first invest in your business.
Without further ado, here are 4 ways to demonstrate promise and improve your chances before the time comes to seek Venture Capital for your startup
1. Perform well in a relevant competition
The business world runs on competition, and it isn’t always the most innovative or even competent companies that thrive because some people crumble under pressure and are never able to deliver on their potential. If you’re essentially untested under the real-world pressure of having expectations placed on you, a great way to experience a trial of fire is to enter an industry competition of some kind.
It could be an apprentice-style challenge to compete against others to find the most successful solution for the provided parameters, or a competition for which you need only submit a suitable product. It doesn’t necessarily matter what exactly the competition is — it’s more about showing that you can put yourself in a position to fail and manage to get results.
Is it risky? Absolutely. You might not only perform poorly but actually place last. But bear in mind that plenty of famous entrepreneurs had to fail enormously before they succeeded. If you can place it in context and spin it as a bold willingness to try and fail, you might be able to turn that disaster into a compelling selling point for your business.
2. Get endorsed by an authority
Investment firms don’t make their decisions isolated from all other factors. They’re capable of being influenced by other opinions, particularly if those opinions come from people they know of and may even respect. Though you’re not yet at the Venture Capital stage, you should have some semblance of a company pitch, and no doubt various pieces of work to show off — so reach out to industry figures who might be interested in checking them out.
Social media makes this far easier than ever before. Instead of needing to track someone down, you can simply say hello on Twitter, Facebook, Instagram, or LinkedIn. Networking is an essential component in business, so it’s fairly unlikely that you’ll find someone impossible to locate on at least one of those platforms. Exchange a message or two, then politely ask them if they’ll take a look at your work. It’s harder to say no to someone if you feel socially connected to them.
If they look at your work and think it’s great, ask them for an endorsement of sorts. It could be an email on your behalf, or a quote, or just a willingness for you to mention them to investors. And if they dislike your work, don’t be disheartened — learn from the criticism, make improvements, and then contact them again. If you show that you’re willing to adapt and grow, they’ll be even more likely to praise you.
3. Provide industry commentary
Leading a promising startup is about more than knowing exactly what you’re doing and what you’re working towards. You also need to know about what else is happening in your industry — what competitors you must outperform, what rules and regulations you must be aware of, and which people and companies are doing great work.
After all, if investors are going to trust that your valuation of yourself and your business is worth believing in, they’re going to need to be convinced that you’ve done your research and aren’t simply operating on the assumption that you’re doing brilliant and pioneering work. Prospective investors may not know much about your industry niche, and may not have the time or the inclination to do detailed independent research, preferring to go by their gut feeling about you.
Try putting together a case study about another business. You can use a competitor, an inspiration, or even a company selected mostly at random (an ecommerce store marketplace might work well for finding a business, since all the performance stats are clearly stated) — whichever business you pick, dig into the mission, review the goals, and assess the performance, inferring why the decisions were made and what you’d have done better. Make it available online, proving that you know your subject matter and have a head for business.
Whichever business you pick, dig into the mission, review the goals, and assess the performance, inferring why the decisions were made and what you’d have done better.
4. Document your efforts online
Through blogging and vlogging, aspiring entrepreneurs commonly chart their paths to success through social media channels and video platforms such as YouTube or Vimeo. It allows them to highlight the results of their work, demonstrate their expertise, and showcase their personalities and characteristics — all things that will look good to prospective investors.
An easy mistake for a budding startup to mistake is thinking that all missteps must be carefully hidden or explained away. This isn’t the case. Investors know that things can’t always go smoothly in business, and respect those who can forge on in spite of adversity. They also don’t want to be presented with semi-fictionalised versions of events. To invest in someone’s future, they need to know who they really are and what they’re really capable of.
What’s more, in doing so, you may be able to attract some grassroots support from other people in your field, building up new connections that might pay off down the line. When the time comes to pursue Venture Capital, being able to boast of a solid number of online followers will present you as someone capable of handling the make-or-break presentations that startups often face.