I often hear from new entrepreneurs with a brilliant idea that they need an investor in order to start.
Shows like Shark Tank have made it seem like building a business is a microwave and quick process- where if you show up with a compelling idea, someone is going to throw money at it.
Not quite.
After working at a Venture Capital firm while in college- here’s some truths about what it takes to get investments.
And note- most of the work happens long before you ever get in front of “The Sharks.”
1. You need to have your own money to put in. They prefer to SHARE the risk.
2. You need a rock solid and articulate business plan with a business valuation so they know clearly what they’re buying into and the equity payout they’ll receive.
3. Depending on the industry/concept/product- you can pitch Venture Capital firms or high net worth individuals- this is a complicated, biased process- but it doesn’t mean it won’t work.
Lastly, you likely will need to have the product or business established, generating some revenue, and seeing profits (idea validation) before getting the working capital from an investor to grow.
Don’t let any of the challenges dissuade you from building your dream- just know that it’s YOUR dream to build- and you need to start, before others will see your vision.
I help entrepreneurs craft, build, and grow their best business idea everyday at www.1K1Day.com– visit and learn more!