"What do you suggest for a one-person startup looking for money to finance growth?"
That's a familiar question from a variety of entrepreneurs. Some have recently gotten going, others are struggling to get the first product launched, while others have not found the magic needed to breakout of a tiny market. All of them are lead by one or two people convinced that adding investor money is just the ticket they need to hop on the growth path.
Here is an example of what I suggested to just such an entrepreneur this week. He has an interesting product selling well into a small intial market.
Good Morning, Tom [not his real name],
Hope your sun in [His State] is shining as much as the sun today here in Carmel, California where I live. It's a wonderful day to enjoy God's creation!
I'm glad you called me today. Since we spoke I've done a bit of work and thinking about your business inquiry. Here are some of my thoughts for you:
BUSINESS
Your product is very well positioned: "[The Product]" has a crisp focus, is clear and enticing. I congratulate you for accomplishing that, it is very difficult to achieve and rarely done well.
GROWTH
The current market seems very small and quite competitive. That would account for your small sales and struggles to break out into a significant growth market. The description of your [Poduct] sounds professional and well written, so product improvement is not an issue. You clearly know what the [Market] business is about.
FINANCING
Your current business is not yet demonstrating the behavior of a beginning that is close to rapid growth. Thus the investor is going to have to be someone willing and able to spend time working with you on creating a plan for a growth breakout that attracts both eager consumers and eager investors. Thus I have the following recommendations for you to ponder:
= Contact as many venture capital Partners (not Associates) as you can from lists of [His City] VCs. The lists are easily found with a quick on-line search. Try to stick to VCs within a one day drive by car to your location. I've found individual VC Partners often putting their own or a friend's money into such efforts.
Consider using this as your initial story: "I have succeeded in establishing a beachhead in the [His Market]. I thought you or an individual interested in [The Product] could work with me to develop a growth plan for moving up and becoming a substantial business. For instance, I have been considering distribution via the exciting, new [Technology] and adding new products for new markets through other creative innovations."
Hope your sun in [His State] is shining as much as the sun today here in Carmel, California where I live. It's a wonderful day to enjoy God's creation!
I'm glad you called me today. Since we spoke I've done a bit of work and thinking about your business inquiry. Here are some of my thoughts for you:
BUSINESS
Your product is very well positioned: "[The Product]" has a crisp focus, is clear and enticing. I congratulate you for accomplishing that, it is very difficult to achieve and rarely done well.
GROWTH
The current market seems very small and quite competitive. That would account for your small sales and struggles to break out into a significant growth market. The description of your [Poduct] sounds professional and well written, so product improvement is not an issue. You clearly know what the [Market] business is about.
FINANCING
Your current business is not yet demonstrating the behavior of a beginning that is close to rapid growth. Thus the investor is going to have to be someone willing and able to spend time working with you on creating a plan for a growth breakout that attracts both eager consumers and eager investors. Thus I have the following recommendations for you to ponder:
= Contact as many venture capital Partners (not Associates) as you can from lists of [His City] VCs. The lists are easily found with a quick on-line search. Try to stick to VCs within a one day drive by car to your location. I've found individual VC Partners often putting their own or a friend's money into such efforts.
Consider using this as your initial story: "I have succeeded in establishing a beachhead in the [His Market]. I thought you or an individual interested in [The Product] could work with me to develop a growth plan for moving up and becoming a substantial business. For instance, I have been considering distribution via the exciting, new [Technology] and adding new products for new markets through other creative innovations."
= Contact local angel groups (an easy on-line search) and get to know how their angels make investment decisions. Look for a Sponsor, a person whom you will enjoy working with, and follow his or her advice MyI intuition suggests females will be attracted to your business).
= Give "crowd-sourcing" a try for a new book. Use http://www.kickstarter.com/. Look under "Publishing" to see how it works for [His Next Product]. It might be just what you are looking for.
= Contact local colleges and universities for Professors teaching entrepreneurship classes. Most do real business plans as class projects and you can get a lot done through eager students for free (marketing, web site updates, etc.). Students bored with their summer could help you.
PRESENTATION
You need an Elevator Pitch, a short minute long, to get people interested. Verbal only.
And you need the 3-5 minute Short Summary as well. Verbal only.
And you need an Executive Summary, 2-4 pages long, with one compelling graphic, ready to email.
YOU
Investors today are looking to you if they invest. So work on how you sound when talking. In the first call and in today's voice mail I heard a very depressed voice. That must change. You need supporting family and friends to help you. Spiritual help is also recommended, church, and the like. I have found several people uplifted by reading the Bible and praying. You can't make it by yourself, Tom.
STOP
Every business leader arrives at a crossroads where the fork is to either to continue trying or stop and get a job. Do no be afraid of making that decision. You could sell your current business for a dollar or more, and move on. That is not failure, it just is a new path. Often this can lead to a better road for a person to travel next.
I wish you The Best on your Adventure!
JOHN
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BOTTOM LINE: Finding local investors is not difficult. Many more exist than you might imagine. Finding the right one for you will take time. You must be ready with your story, short and longer versions. And you must be ready to face the decision point that leads you to shut down your tiny first attempt at a startup. Friends and family and good mentors can help keep your spirits up during the often very time-consuming process of finding the best investor. Focus on what the money would do to help you build an unfair competitive advantage in a fast-growing market that lacks a dominant Gorilla leader. That is what will attract the money. You can do it, many have preceeded you!
I wish you The Best on your Adventure!
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