What 10 Steps are Entrepreneurs Following to Catch Your Money?

In the world of entrepreneurs, there are a variety of personalities. There are those who believe that their idea is enough to draw funding to get their company off the ground, while at the other end of the spectrum there are those who worry that the smallest of detail has been overlooked and therefore their funding will be denied. As an angel, you want to find that entrepreneur who is somewhere in the middle – hungry for excitement and success, yet not so cocky that they will put the endeavor at higher risk of failure.

To best identify the type of entrepreneur you should be funding, do a little research and determine what kind of advice these entrepreneurs are following. Not all advice is good and not all advice comes from those who are actually making the funding decisions. But gaining this knowledge will give you keen insight into easily recognizable signs that indicate whether or not the entrepreneur and his or her pitch are even worth your time. [3]

CNNMoney.com Small Business recently posted a piece that guides entrepreneurs on their quest for landing startup funding by providing 10 steps to catching VC cash. Let’s take a look at this advice and how it incorporates into other areas of the industry and your approach to investing to determine if you have the information you need to weed out the big talkers to get to the real gems. [1]

• Show your passion – entrepreneurs that are passionate about their startup speak from the heart and can quickly draw you in. Just be sure their passion does not camouflage a lack of due diligence.
• Be a cheap date – you know that in order for your money to grow, it can’t be used for frivolous extravagances or bloated salaries. Those who respect these guidelines are more worthy of your time and investment.
• Time is money – of course it is. But this fact works both ways. Entrepreneurs need to be able to show you that they can deliver profits within the specified time period; but if that period is too short, that is a red flag.
• Show you’re worth it – you know that you are investing in the person as much as the company, so make them earn it. If you don’t feel it in your gut that they are worth the investment, it is time to move on to the next opportunity.
• Build a great team – the entrepreneur is an important player, but his team is who will make it happen – or won’t. Look for a strong team that blends expertise and knowledge with proven ability and performance.
• Think big – but not too big. Modesty generally has no place in the meeting as you want to see the possibilities for the opportunity laid out in black and white. Keep in mind that as exciting as big thoughts are, they also have to be realistic.
• Nail your audience – if the entrepreneur doesn’t know for sure who is going to buy their product or service: meeting over. Understanding the target audience and why they will propel the company to profitability is essential for every startup.
• Schmooze hard – okay, admit it, you like to be schmoozed. But at the same time, you don’t like the hard sell. Keep your ears open and your wallet closed while networking and you will most likely find some great tips on who should get your attention.
• But don’t over sell it – an extension of the previous tip, entrepreneurs who don’t understand that you are not the average customer are likely to kill the deal before you have even heard their pitch.
• Be right on the money – entrepreneurs who are seeking startup funds in order to protect their own equity stake are not interested in making you money. Run from these startups as they are sure to be a money pit.

While it is true that specific industries may catch your attention more so than others and that fact alone can influence your decision, understanding what to look for in an entrepreneur can be just as important as the idea itself. After all, he or she is the company at that point and a lack of promise generally equals a lack of profitability. [2]

Notes:

[1] 10 Steps to Catch VC Cash
[2] The Truth About Venture Capital
[3] Getting Funded with Venture Capital