Business оf thе 21ѕt century is driven bу tech guуѕ who аrе pioneering ѕоlutiоnѕ thаt are сhаnging thе wоrld. Sоmе оf the most рrоfitаblе and vаluе drivеn companies today are еithеr core tech соmраniеѕ оr those whо are in оnе wау оr аnоthеr hеаvilу dependent оn tech tо рrоѕреr and deliver results.
The problem however, is that most times, the guys who start these businesses are not competent in financial management, business modelling and many other factors that go beyond tech.
This makes it difficult for them to court and get the attention of financiers who can support and help them grow very fast by moving from idea to a profitable businesses.
In this article, I have enumerated some very useful tips and principles that will help techpreneurs attract more investors to their ideas and businesses.
Understand the business aspect of your idea and create a business model that reveals that to investors
Ideas don’t make money. What makes money is profitability and this is what your business model should be quick to reveal. Make sure your model is strategic, tight and goes beyond just good ideas to profitable ideas.
You’ve got to tell us how you’re going to make money. It’s about the business model, not technologies. Show me a pitch deck that’s only 4-5 slides and no more than 5-10 minutes. Show me a 3-5 year plan and we can talk more.
Omobola Johnson, Partner at Nigerian venture capital fund TLcom Capital
Investors are extremely interested in justified ideas and you do this with facts and figures.
Be disciplined and stick to plans
Tech guys spend many dark years coding and creating solutions. Therefore, some might make the mistake of seeing investors’ money as an answer to their prayers and reward for their lonely days of coding.
As such, they might forget the money isn’t free because it was given in trust and for a particular business purpose. When this becomes the case, entrepreneurs tend to engage in activities that will not favour the investor or the business in the long run.
Richard Wnuk, senior advisor at Blue Heron Ventures said his fund used to adhere to a “spray and pray” strategy of investing in many promising startups. But now, they insist on seeing serious discipline in the entrepreneurs before paying attention to them no matter how brilliant their ideas might be.
This shows that your discipline as a person is part of what the investors are investing in.
Make it easy for your investors to cash out
Not all investors like to be trapped in a business. Some would rather make their money and leave very early to pursue other ventures.
During your pitch, show investors how they can exit the business when they want to. Also make it easy enough for any of them who wishes to leave to do so profitably.
What we’ve been seeing is a big disconnect between the entrepreneurs with a tech background and the business plan. What we as investors are interested in is: “what is the exit strategy?”
Richard Wnuk, senior advisor at Blue Heron Ventures
This is important if you want to attract profitable attention and money.
Stay focused on the market and not you.
Most tech entrepreneurs lose it. They come to a point where they confuse personal needs with market needs. Maybe because the idea in question started as a personal project or a hobby, there is a high tendency to believe that the market should want or accept what you want.
Founders need to understand that this is wrong. Create for the market what it wants. Even if it means modifying or even abandoning your original plan, do so if you want a business and the support of investors.
Investors hate heady entrepreneurs and many a techpreneur have this problem. They believe that since they have the technology and expertise, everybody should listen to them. This scares investors away and leaves many techies broke and broken with beautiful ideas that nobody wants to have or invest in.
Chase your customers, Find out who they really are and Make sure that they really need your product.
Nathan Millard, CEO & Co-Founder of G3 Partners
The need to create a feedback loop and observe what exactly the customers want as against what the entrepreneurs want or has created is very important.
Never go alone if you want to go far
If you want to make your ideas work, get a team of believers who are equally skilled in other areas to go with you. This helps in boosting investors’ confidence.
Investors are not usually comfortable trusting their money with people who have concentrated skills. A pool of different talents and knowledge base is better as it will improve creativity, engagement and profit. It will also draw attention and bring money.
A techpreneur should surround himself with people that have skills in finance, legal, marketing, and the likes. That way, they are not lost in the product while forgetting other areas that need to work for the product to make money.
Regulatory risk should be addressed
Investors want to stay safe from government hammer. This means that a techpreneur should show clear path and plan on how he intends to navigate regulations or comply as the case maybe. This shouldn’t be left to guess work and speculation.
Investors are willing to go with any founder that shows strength in handling the government slaps of their individual countries as many investors have lost funds due to regulatory cases and uncertainties.
They have just gotten wiser and unwilling to fly blind anymore in that respect; you should as well.
Don’t be desperate
Desperation stinks and investors can smell it miles away. This will scare a lot of good investors away, leaving a few who will hand you easy money which tends to choke you and your business in the future.
You need to be sure that the investors you are bringing into your business align with your philosophy and also accept you on your own terms. Though you are looking for money, you should also put your foot down on certain issues to avoid diluting your values so much that you sell yourself short and out of your business.
Entrepreneurship is an interesting journey which must be diligently embarked on. It has its own unique set of challenges and those who play the game to win must learn how to set themselves up for that right from the beginning.
I believe that if tech starters pay close attention to these points raised above, they can stay safe and build a business they would be proud of in the long run.
To your #moneysense.