Investors – from pre-seed through to the later series rounds – are looking for a founder that can show they not only have an answer to a problem, but they have the expertise, skills and leadership to launch, scale and make a success of their business.
But how do you go from a person with a great idea to being investable? We sought to answer this question in our latest report by drawing on the insights of five leading technology investors from Lightrock Private Equity, Insight Partners, Partech and Element Ventures, as well as angel investor, Andreas Wuchner.
And in case you didn’t have time to read the full report, here are our crib notes on the five steps for how founders can build an external profile to boost attractiveness with investors:
Be a leader, not a technologist
Founders should be passionate about their solution and the problem it is going to solve. After all, no one is going to be more excited or work harder for your business than you. But that isn’t enough. Elizabeth van den Berg, Executive Vice President at Insight Partners, put it best when she commented that “the idea isn’t enough - someone at Google could take it and do it in two weeks”.
Investors at all stages need to be confident that founders have the skills as a leader to turn the idea into a business. At early stages, it’s about showing that you have a vision and the leadership skills to manage and grow a team. At Series B+, you need to show you can deliver the intended business outcome with the strategy you have set.
Know how to sell the story
The story is at the heart of a founder’s ability to present themself and their business as an investable opportunity. Putting it bluntly, angel investor, Andreas Wuchner stated how he has “seen so many people with great technology ideas that never got anywhere because they couldn’t make the case”.
But what does it mean to tell the story? Martin Karschkes, Growth Investor at Lightrock, shared that “it can’t all be blue sky” and you can’t “just say you’re the next Amazon of…”. Good storytelling has to be balanced with clear metrics – particularly in the current environment where investors are more concerned about downside.
Another common mistake Keji Mustapha, Global Director, Brand & Community at Partech, shared is that “founders often talk about the product features rather than how the product solves the problem the customer has”. Particularly in the B2B market, you just can’t lose sight of the fact that people buy outcomes, not technology.
Build your external network
Commenting in the report, angel investor, Andreas Wuchner rebuffed the ‘common truth’ that there is only one way to be successful and that is “to work super hard”. He believes that network and relationships play a critical part in a founder’s success, as people will always come back to you. To that end, some investors are now looking at founders’ social networks for evidence of a strong network. And investors should definitely be part of this network. Joanna Wlazlak, Head of Platform at Element Ventures, called out the value of social media in approaching VCs – particularly Twitter – “on a content level rather than through raising, especially if you have a particular problem you’re solving”. Although she did warn that you don’t want to spend so much time on it that people wonder when you have time to run your business.
Establish a personal profile
One of the greatest challenges that investors perceive for new founders is awareness. With competition for capital high, the value of ‘being noticed’ in the media and at industry events is increasing. After all, as Partech’s Keji Mustapha put it, “it’s great to put it on your own blog, but ultimately if no one knows you, or your company, the likelihood of them stumbling on your blog is slim”.
The power of PR to attract investors was undisputed amongst the investors we spoke to. Lightrock’s Martin Karashkes called out that while “we have a good understanding of market participants, sometimes you read an article and that’s where you find an interesting company. I believe it is particularly useful for bootstrapped companies that may not have had their growth reported on in the same way as those that have previously sourced capital from VCs”.
Insight Partners’ Elizabeth van den Berg agreed that it was an important tool for driving brand awareness and brand equity, commenting how “by the third time someone has heard from you – whatever the encounter – that’s when it starts locking and resonating”.
Show your personality
Last but not least, one of the most important aspects that came through in every conversation was for founders to retain their personality and authenticity as they build their external profile.
That means being conscious of your strengths – and your weaknesses – and playing to them. As Element Ventures’ Joanna Wlazlak put it, “If you’re introverted and you try to start with a joke – it’s probably not going to be the best start for you. Authenticity is important no matter what personality type you are. And bring in people around you that will compliment you.”
You only have one chance to make a first impression – make it count
With investors, your first impression starts before you enter the room to pitch. Understanding what you can do to boost your attractiveness with investors before and when engaging with them is a powerful tool no matter what stage you are at on your company’s journey.
Kate Baldwin is founder and Managing Director of The Flywheelers.
