Alone in the Crowd
February 27, 2008
There is nothing so lonely as the realisation that despite your great idea and your overflowing passion and vision, you’re simply at the rear of a long queue of entrepreneurs seeking funding.
Understanding the criteria venture capitalists will use to evaluate your project is an important next step - if your venture is ever to get funded.
While a high score in each of the following categories isn’t essential, it will be almost impossible to attract capital if you don’t score well in most categories.
Captivating idea
Good ideas are surprisingly common and a seasoned investor has already rejected countless pitches in their career. You’ll need to convince them that your project is an elegant solution to a big problem or opportunity.
Strong Team
It is expected that there’ll be some gaps in your team, but the founders must have the skills, talent and experience required to build the business. Few lone entrepreneurs ever get funded. If you haven’t already attracted some other ‘believers’ then your preaching will almost certainly fall on deaf ears.
Market Opportunity
Investment’s Holy Grail is to create a ‘must-have’ product in an uncrowded market. Few ideas are that lucky or unique, but your concept must still have credible potential to deliver significant value in a proven market. Fortunately, the size of the business potential matters far more than the size of the market.
Advanced Technology
Geeks and and early adopters may be thrilled with your concept, but it must also have the potential to attract a broader range of users. If you are at the cutting-edge of technology, you’ll need strategies to keep you ahead of the pack and outpacing the inevitable horde of imitators.
Competitive Advantage
Brag about your idea having no potential competitors and you’ll often bring a hasty end to your pitch. It is naive to believe that others don’t have similar ideas, can’t soon reverse engineer or replicate the concept or that there isn’t a viable alternative in existence somewhere.
It is well understood that your financial projections are a series of estimates based on numerous assumptions. Expect your forecasts to go under the microscope and be ready with convincing reasoning on how you calculated growth rates, profit forecasts and expenses. If your team doesn’t have the nous to bring together credible estimates, it’s highly unlikely that you’ll have the business acumen required to make those figures bankable reality.
Proof of Concept
Be prepared to validate your concept with tangible evidence. Your pitch will gain credibility if you can show evidence of a strong core team, customer testimonials, backing from industry experts, solid market research and supply guarantees. Ask yourself some tough questions and look for the gaps or weaknesses in your own logic, methods or strategies.
Photo by Gaetan Lee
It is well understood that your financial projections are a series of estimates based on numerous assumptions. Expect your forecasts to go under the microscope and be ready with convincing reasoning on how you calculated growth rates, profit forecasts and expenses. If your team doesn’t have the nous to bring together credible estimates, it’s highly unlikely that you’ll have the business acumen required to make those figures bankable reality.
Proof of Concept
Be prepared to validate your concept with tangible evidence. Your pitch will gain credibility if you can show evidence of a strong core team, customer testimonials, backing from industry experts, solid market research and supply guarantees. Ask yourself some tough questions and look for the gaps or weaknesses in your own logic, methods or strategies.
| Photo by Gaetan Lee |