Fundraising Intangibles: 3 Things Investors Look For That Cant Be Measured
While working with 1776 founders in the earliest stages of their business growth, one resource continuously crops up as an overwhelming need throughout our network: Capital. Founders are looking for not only actual investment dollars, but access to information and insights that will directly affect their ability to successfully raise a round.
In terms of making smart business investments, most investors are evaluating companies using a similar set of statistical criteria. How big is your market? Who are your competitors? How many customers are you currently serving? What is your revenue model? Is your company scaleable?
Through our monthly Capital Stack program, we have given founders the opportunity to ask their burning fundraising questions to over 50 investors from the Philadelphia & DC Regions. What we’ve found during these candid conversations, is that it’s not just data that drives investor decision-making. Here are the top three intangibles that seem to be just as important as the number crunch.
Rob Runett, of Motley Fool Ventures, said it perfectly, “The best time to meet an investor is not when you’re looking for money. Build a relationship before you ask for 100k.” Other investors such as Glen Gaddy, of Robinhood Ventures would agree. He told our Philadelphia founders, “Identify key thought leaders and don’t ask them for money, ask for advice.”
Some advice on how to take first steps towards building these relationships? Do your research, and purposefully seek out investors you think would best be able to help you navigate your growth. Reach out with meaningful questions, and be receptive to any feedback or advice they are willing to offer. Get investors to buy into YOU. Allow them to see the organic growth of your company through seeking advice throughout your early stages. Once invested in you, your company, and your progress to-date, they will be more likely to invest or recommend you to other investors.
At 1776, we work with a number of startups that are solving complex challenges, often in a regulated marketplace. Because these challenges are often specific to a certain level of industry knowledge, it is extremely important for founders to be able to tell their company’s story in a way that is understood by the general public, and can pull on the heartstrings of their target audience. Rick Genzer, of BFTP, describes this storytelling ability as the “lean forward moment – you want to be sure your story has a moment that causes your audience to lean forward.”
3. Belief in the Founder (or Founding Team)
Perhaps the most intangible of the three, having a genuine belief in the founder, is a noted point for investors across the board. An authentic connection is definitely not something that can be fabricated, but it does sit at the intersection of the “right company” paired with the “right investor”. Investors don’t just give money to anyone with a great company or idea, and founders shouldn’t take money just from investors willing to give it. Brian Selander, serial entrepreneur and Angel Investor, believes this just as much as anyone. “I wish more people were willing to say ‘maybe that’s not the best thing’. But if you’re in, you’re behind the founder and you have to help them get to their solutions. You have to believe in the team entirely”.
There are some caveats to this belief, however, once an investment is made. Founders should not rest on the laurels of their relationship and the belief of their investors. A red flag for Luisa Sucre, of Revolution, is if a company founder is not approachable. “We are here to be advisors, to really help founders. You also have to be coachable.”
Long story short, building a business is HARD. While the data is important in proving out the success and worth of your business, don’t forget that there is a human element as well. If you have a passion for what you do, a work ethic that won’t quit, and an ability to make others understand and buy into why that passion exists, then the chances of obtaining that elusive capital becomes more realistic. It will lead you one step closer to tracking towards your company’s success.