6 Key Thoughts Along The Fundraising Journey (No3)
February 7, 2012 5 Comments
It’s Not All About Your Business Idea
Yes, it really is true and yet many founders give the impression that they alone are holding the big ticket to success. The statistics show that the odds are heavily stacked against every milestone of business success that you are likely to encounter. From staying in business more than 3 years to procuring angel investment, the odds are not in your favour. Even if you do get investment, there are a million and one reasons why a business won’t achieve success and the statistics prove it. Angel investors are speculating their personal money, so don’t be naive and assume that just by the virtue of having a business idea or a business plan that you should automatically have the right to talk to investors. Business ideas that have not developed into an investment proposition are rarely worth the time and effort. My belief is that founders often feel that if they can just hook the investor with the opportunity then all other considerations will take care of themselves. Most investors that I know are too cautious with their money to hand it over on an untried opportunity alone. Most investors are not looking for good ideas (per se) but for ideas that have begun to prove themselves by gaining some form of business traction. The potential of the opportunity does not override all other considerations.
Investors are looking for people that have gone beyond just identifying a business opportunity, to actually demonstrating and validating it in the marketplace. Such ‘wise heads’ will often benchmark against real-world data that shows how much money they could return for an investor. If “ideas are worthless” (as Colin Willis of the business accelerator Ignite100 explains in the article link below) then what is worthy to an investor? My answer would be founders and entrepreneurs who know how to ‘configure an investment proposition’ and who have validated it as far as is humanly possible. There is always an abundance of investment opportunity out there for investors but an investment proposition is different, it’s an idea or an opportunity wrapped up in as much tangible market place proofs as possible. This proof is often referred to as traction or validation but more about this in article No4 – coming soon.
A few good articles loosely on the same theme…