Lavin Entrepreneurship Center Articles
What Investors Look for in an Entrepreneur or Startup
Whether you have already pitched your startup company or are planning to fuel your idea, it is important to know how to prepare and connect with investors. Of course, each investor is different and has their own set of criteria when evaluating opportunities. However, we have narrowed down the three main factors that all investors will take into account when considering a potential investment: management, momentum, and market. As an entrepreneur, it is in your best interest to comprehend each ‘M’.
Here are some insights, from investor eyes, on each one:
- Management essentially means your team’s capability. Investors need to be impressed not only with your product or service idea, but with your team. They will want to know why your team is well positioned to build and execute your vision. What makes your team a great leader amongst other companies? What unique skills does your team possess? Does your team have the “intelligence” to pivot if necessary? These are factors investors will look into so, it is important to recognize your team’s strengths.
- Market size demonstrates to investors how big your idea can get, which could bring a great return on their investment. Investors look for companies that will grow quickly and can expand into other markets as well. Investors relish big markets, especially large markets that can be disrupted and keen focus on the initial target segment. It is important to know your target audience and the benefits it will bring to their lives.
- Momentum can mean something different to each investor, but essentially it is your product or service “traction”. In other words, what have you accomplished before you ever meet an investor? As an entrepreneur, you need to start taking action before you meet with investors. This is where you demonstrate that the market is already using or engaging in your product or service. By doing so, you are showing commitment and resolve, and investors will be impressed.
In all, investors are looking for exciting ideas lead by credible, trustworthy entrepreneurs. They are not just investing in your idea, but also in you; so remember you need to build trust with potential investors. Meeting with investors may seem intimidating, but if you prepare for the three M’s, then you can put your startup in a great position.
Three Things Investors Look for in Entrepreneurs or Startups
Successful entrepreneur, startup investor, and author of The Art of the Start 2.0, Guy Kawasaki, shares the knowledge he has accumulated in order to better-prepare entrepreneurs for their startup journey. His book covers all the steps to a successful startup, beginning with how to come up with good ideas, how to receive feedback, how to lead a team, and how to grow through socializing and partnering. Here are three tips from Guy’s book on how an entrepreneur can be better prepared for an investor meeting:
- Meaningful stories inspire faith in you and your product. Investors are constantly bombarded with a lot of information. The best way to engage with them is through powerful storytelling. As an entrepreneur, you have to sell a vision of a different future. You must prove to investors that your product will benefit the customer. Guy suggests to get personal with stories to make the facts more relatable. “Faith, not facts, moves mountains”.
- Keep it simple. Guy emphasizes the importance of simple explanations. He advises entrepreneurs to explain what their product or service idea does in the first minute. This information is the anchor that investors need for the pitch to go well. Once your audience has learned what you do, they can then listen to everything else more attentively and ask further questions. Many entrepreneurs think a pitch is a narrative or an autobiography. Guy suggests, “Make it short and sweet”.
- Know your audience. It is important to research and understand the investors before meeting with them. Visit the organization’s website, read reports, and use Google searches to gather core information about your audience. Look for other companies the investors have already invested in. Guy points out three areas to investigate: organization background, executives, and current efforts. Then, brainstorm with your team to find angles to make your pitch powerful and meaningful. “Learn what’s important to your audience”.
Whether you are an aspiring entrepreneur, nonprofit leader, or small business owner, these three tips will guide you when pitching your product or service idea. Guy’s goal is to help young entrepreneurs avoid the common pitfalls in their quest to make a difference and change the world.
The published article “Doing more with less, systematically? Bricolage and ingeniruing in successful social venues” written by Chamu Sundaramurthy, Congcong Zheng, Martina Musteen, John Francis, Lawrence Rhyne, poses an interesting idea between bricolage and engineering.How those two factors play into social entrepreneurship. The main difference is that one focuses on the opportunities to benefit the society. The other focuses on the profit of making money. Once that thought was made clear the article then goes on to describe the theory behind bricolage and ingenieuring and the difference between the two and how they play into social entrepreneurship. Bricolage as explained in the article is an approach to reasoning and knowledge in the sense that “individuals interact with their environment that is practice centered”. It focuses on what is present in the environment around them and they make means to using those resources. In ingenieuring the focus is more on scientific and rationality, people in this type of environment focus on trying to find the specific resource needed for their research or idea. They look at the world more along the lines of how it is presented.
The purpose of the article is to research and examine the effects of each; bricolage and engineering in the three different cultures they tested; South Africa, US, and Brazil. Check out the original research paper here.
Three Tips for Women Who Want to be Leaders
Facebook COO and author of Lean In: Women, Work, and the Will to Lead, Sheryl Sandberg, advocates for the success of women striving to reach the top of their professions. In this book, she discusses why there should be more women in positions of power and management and how to do so. Here are 3 tips from Sandberg’s book for women whose goal is to reach the top of their careers.
- Sit at the table
- This act of “sitting at the table” comes from the fact that women are typically less confident and attribute their success to external factors whereas men are more confident and attribute their success to internal factors. The thing is… it is a combination of both. If you want to be successful, you have to work hard, accept help from others, but most importantly believe in your skills and capabilities. Be confident in your abilities and even when things are going rough, Sheryl recommends to “fake it until you make it.” Let your abilities be known and let your voice be heard. Sit at the table.
- Don't leave before you leave
- It is probably safe to say that a lot of women have thought about their futures regarding getting married and having kids and thoughts of that nature. And while it is not bad to think about those things, make sure you are not allowing those thoughts of the future to hinder your career choices before you are even at those stages of your life. Seize the opportunities that present themselves to you while you can and don’t let them pass you by before you actually have to. Don’t leave before you leave.
- Work together
- If we want to achieve the equality we have been seeking, it’s time to start talking about and acknowledging that the small percentage of women in upper management is an issue. Women should be working together and encouraging one another to be leaders. But we also need to remember that men are just as important in this movement as women. We need to include them in the conversation too. Let’s work together.
According to Sandberg, these tips are the kinds of messages we need to be telling ourselves, other women that work with us and for us, and our daughters. So let’s start doing that and building our future women leaders.
Own Your Career & Design Your Luck
When people look to CEOs and their companies for inspiration, most of the time all they see is the success. What people don't see is the hard work, dedication, and commitment that got those companies there. They hope to be lucky enough and maybe even rely on luck to be successful one day with their future endeavors. However, successful business owners created their own luck because they worked hard and followed their passion. The one thing all entrepreneurs need to know is that “luck” is mostly by design. Actual luck, which can be good OR bad, is only 10% of the game.
Most people just assume that when people are successful, it is because they got lucky, but co-founder of Volcom, Thom McElroy, was tired of hearing people constantly tell him how lucky he was. What people did not know was that while he was building Volcom, he was simultaneously working at his design company. From that experience, these are the three propositions Thom McElroy has shared on how to design your career and how to create your own luck:
- Really dig deep and find what drives you. Be all in as you pursue the things you are passionate about and do not waste your time with what you are not.
- When creating a business, there is risk in everything you do. Measure those risks and be smart as you take them. And while you may experience some fear, refusing to take any risks at is just as big a risk as any.
- Believe in yourself and the talent and ethics that you have. Continue to work hard and trust the opportunities that come your way.
When it comes down to it, always remember to listen to your instincts. Pursue the things that matter to you and dive all in. If you are not passionate about what are you doing, then why are you doing it? No matter the risk, be smart. But always remember to trust yourself and allow yourself to trust others and also instill trust in the people around you. Lastly, remember to enjoy the ride because you only get to do it once.