5 Things Every Entrepreneur Should Know and Have
When you work in venture and small business investing, you figure out pretty quickly that you’re really in the business of investing in talented entrepreneurs. It is their dreams, hard-work, and execution that translates into ROI. The earlier the opportunity, the more critical the talent and experience of the leadership team. For earlier opportunities, experience drives everything from valuation to timelines in my experience.
Time is money, as the old saying goes. As much as I love and admire entrepreneurs, few things can chew up time like a headstrong and impertinent entrepreneur running on fumes, dreams, and resilience. On the one hand, I admire the persistence and spirit of it all. On the other, I make my money finding opportunities that fit with our investment profile. At the end of the day, if the opportunity doesn’t fit it is execution and not conversation that gets things more in alignment
To save myself (and others) time, I’ve learned to look for some tell-tale signs. As quickly as possible when chatting with a potential entrepreneur, I look for these five things that every entrepreneur should know and have:
- Passion — I’ve been around long enough and experienced enough false starts that I believe without question that passion is a critical element of running, let alone starting, a business. If you don’t radiate energy and enthusiasm, it’s hard to even reach the second item. How are you going to change the world and make money in the process?
- Focus — I need to know that your passion to change the world is channeled through a filter of discipline that will allow you to juggle the many responsibilities and demands of managing a business. Maybe absent-minded and/or distracted entrepreneurs are successful, but I’ve never met one. The intersection of PASSION & FOCUS is the cornerstone of a driven entrepreneur.
- Partner(s) — No one is an island in and of themselves. If you don’t have a partner, you need one. If you don’t play nicely with others, maybe entrepreneurship isn’t for you. No partner means scaling is an issue, and it means all the eggs are in one basket. Both are thing that cause concern when analyzing an opportunity.
- Expectations — Please don’t tell me this has as much potential as Google or Facebook. Even if you’ve nailed the first three, your credibility is shot when you do that. Also, grounded expectations goes for more than just your financial projections. Make sure you know the business of raising capital. Case in point, don’t ask me to sign a NDA. It’s like asking for a prenuptial agreement before asking someone on a date.
- An Elevator Pitch — In 60 seconds an entrepreneur should be able to convey everything above. Not being able to do that in under 60 seconds is sign that you don’t really have things in points 1 through 4 worked out. It also means that you likely don’t have the value proposition defined, probably don’t understand the need in the marketplace, and almost certainly haven’t figured out what the marketplace is willing to pay.
Honorable mention for the three things I typically request during an email follow-up (which I hope you take the initiative to instigate):
- Website — This seems like such a no-brainer in today’s world. I don’t mean you need to see something from a fancy marketing firm with expensive logos and fancy templates. In today’s world of cloud services, $50 a month will get you a professional grade and relatively robust web presence. I need to see lots of good information and a way to drive sales.
- Executive Summary — A one to two page PDF that includes the logo, data tables, charts, etc. I want to read about the value proposition, market opportunity, leadership team and, to a lesser extent, the financial projections.
- Pitch/Slide Deck — Please say it in no more than eight to twelve slides, and make sure every piece of information included is high value-add. Let the slides be the illustrative element of your compelling story.
Remember, my job as an associate in a venture fund is to find great opportunities that fit the investment profile sought by the fund managers. The things above help me to articulate a compelling story for them, helping me get them interested in what you’ve got to offer. Make my job easier for me, and I’ll make it easier for you to get in front of them.