I'm feeling a lot like Sigmund Freud these days. You may
recall that people often asked the famous psychiatrist "What
does the opposite sex really want?" Since the bursting of the
high-tech bubble, people around the country frequently ask me
"What do investors really want?"
Let's face a hard fact. Many of the companies that were
looking to raise money in the late 1990s were not real businesses.
They were ideas--often brilliant ones, but they were not companies.
They had not developed, tested or launched their initial product or
service. They had no clue (although some had done some market
research) whether the consumer would buy what they were offering
for sale. They had no revenue or cash flow from operations. And
profits? As they say in the Bronx, "Fuhgeddabouddit!"
| Learn More |
| Financing expert David Newton can help you with any other
questions you have about getting capital. |
Wyn Lydecker, a business
development consultant based in Darien, Connecticut, helps
early-stage companies craft their business plans to attract outside
capital. I asked him to share some insights about what's
working and not working these days when it comes to attracting
outside capital. "We are finding that angels and venture
capitalists are only looking seriously at businesses they can
understand," says Lydecker. "Investors tend to invest in
what they know. They don't have the time or inclination to
learn a new industry."
Content Continues Below
Lydecker reminds business owners to do their homework before
asking for money. "Target your pitches to investors who are
interested in your business category. If you have invented a new
pump for boats, for instance, try to find investors who are
yachtsmen or sport fishermen."
Investors are not really interested in how your products work.
Believe it or not, most are willing to trust you to work the bugs
out. What they want to see, preferably at the beginning of your
presentation, is an in-depth knowledge of your marketplace, and how
your products and services serve that marketplace. What problems do
your products and services solve, and why will people part with
their hard-earned money to buy your solution?
Page 1 |
2 