Allison Langille | Social Earth
The following is the first in a series of posts interviewing Ennovent’s Director – Impact Circle and Sales, Digbijoy Shukla addressing the disconnect between social entrepreneurs and investors. Digbijoy has significant experience from both the entrepreneur and investor perspective, having engaged with startups from the beginning of his career and now engaged with Ennovent, an impact investor and enterprise accelerator.
I often hear two conflicting, yet ever present, statements from key players in the enterprise ecosystem: from entrepreneurs, “how can I raise funding for my venture” and, likewise from investors, “where can I find investment-ready enterprises?”
What has resulted is a clear disconnect between entrepreneurs and investors, which, too frequently, inhibits the ability of either stakeholder to generate the relationships, connections and results required to realize their goals.
Because I mentor a number of entrepreneurs, have launched several ventures thus far in my career and work day-to-day with a range of investors (angels, foundations, venture capitalists, private equity firms etc.) my work gives me a unique opportunity to understand both perspectives.
What I’ve realized is that there is no quick fix for this issue. Both entrepreneurs and investors must work together to foster a deeper understanding of the other’s goals and constraints to enable more productive relationships. Thankfully, many networks – like Ennovent’s online Global Network – conferences and events are working to bridge this gap in a meaningful way.
But beyond these important initiatives, entrepreneurs themselves are in an especially unique position. While they know their business inside and out when pitching to an investor, all-too-often entrepreneurs aren’t able to pull themselves out of the daily grind to tailor their message for the investor audience.
With this in mind, below I’ve outlined the top three tips specifically for entrepreneurs seeking funding.
Tip 1: Put yourself in an investor’s shoes
Imagine for a moment if someone approached you with an idea or business plan similar to yours– how would you react? What would be the questions you’d ask? What would be your concerns? Work to anticipate the questions that an investor may ask, looking at your venture from their perspective.
Despite the fact that investors are motivated by innovative ideas, they are often equally bound by fiduciary responsibility to their partners and investors. As a result, they must ensure the enterprises they chose to fund can delivery maximum returns – which may inform many of their questions or concerns.
Tip 2: Ask the hard questions
The reality is that entrepreneurs can become so consumed by a business idea that they sometimes forget to ask the hard questions – the questions that investors rarely ever forget about. Below I have compiled a few of these hard questions from my experience as both a business owner and funder, that you should be asking yourself before approaching an investor:
- Do I have the right team in place with the required skill set to implement this business opportunity?
- Have a clearly identified my target customer and what need I am meeting with my business?
- Have I really mapped out the market size, versus just reading a report or statistic?
- Have I figured out how much my customers would be willing to pay for my product or service?
- Do I know why would customers choose my product or offering over others which are comparable
- Can I clearly articulate the key differentiators in customer benefits, not just from an internal perspective?
- Do I clearly know how my service or offering will make money – for example – who will pay me, who will charge the customer, how and when?
- Do I know how I’m going to market and sell my product or service?
- Do I know who I’m currently or in future likely to compete against and what is my plan to win this battle?
- Have I planned for all the market risks, financial risks, business model risks, execution risks?
- Can I clearly articulate what I intend on doing with investor funds?
Tip 3: Directly address successes and challenges
More than a perfect business model, investors are looking to see that entrepreneurs have thought through the successes and challenges a venture may face. Ensuring that you directly address both expected wins and failures while demonstrating that you’ve thought through all the intricacies of your model, is the best place to being when looking to build investor relationships and secure funding.
Approaching investors and building a mutually beneficial relationship is not an easy feat. However, in following the above noted quick tips, entrepreneurs will be better placed to secure the support and resources required to implement a business idea.