In moving beyond friends and family for investment each entrepreneur has to become a great story teller. You may not be PT Barnam, but the story of your startup, and your ability to tell it, is your greatest asset at this point. It is something you should prioritise, practice and refine every time you do it. It is also something you should make customer centric, with the scope, style and timing for your story being uniquely aligned to the audience with which you engage.
For investors, the three key questions to get clearly positioned in your story are:
Why this?
Why you?
Why now?
You may not have much product. You may not have many customers. You may not have much of anything at all, but if you have a compelling story to sell then you have hope!
Like good comedy, startup success has a lot to do with timing and the third question in this list is the one that will make your idea most compelling to an investor. You should also expect in your discussions that their speed of execution on an investment will be directly correlated to the “why now?” aspects of your idea. If you don't make it 'urgent' then neither will they.
Why you? Why this team? This is so important for early stage investors because they know you have a high chance of failure and they also know that even if you succeed it is unlikely to be on the first attempt nor will it be without a pivot or two. Along the way the character of your team (and by that I don't mean the resumes) will be what carries you through. It is also interesting to think that for early stage investors they will have a lot of interaction with you as an individual. They will therefore be more likely to invest in founders with which they have a genuine rapport and affinity. They want to ENJOY the journey with you!
Why this idea is, somewhat counter intuitively, the least important of all three parts to your story mainly because every early stage investor knows it will change so much over the next 6 to 12 months. You may begin revolutionising the shipping container business and end up operating cruise ships and they know that. They accept that before their money goes in. So when you are selling your story, try to tone down at least some of the gushing faucet of features and ideas you have piling up in your consciousness. They aren't the big sell you think they are.
One of the top three reasons for startup failure is not having the right amount of money at the right time. Your ability as a founder to raise money ahead of when you need it, and spend it at a rate that enables you to deliver success, is going to be repeatedly tested. If it's not you on the founding team that takes on this role, then make sure one of you does and does it with purpose and intent. Their activities should be core to your strategy and should be well timelined, monitored and choreographed. Many good startup ideas have fallen because they got this wrong, just like many political elections have been lost because a good candidate couldn't fundraise.
Interested in getting real about your startup project? Join our weekly workshops every Monday at 5 p.m. at Fábrica de Startups.