Often social media platforms like Linkedin, Facebook and Quora are swamped with questions by nascent entrepreneurs. Entrepreneurs and new founders ask questions like how to raise finance from angels or PE, what should be included in the one pager, what are dos and don’ts for preparing a company’s synopsis, how to prepare business plans, how to do financial projections etc etc.
One of the greatest challenges early stage and budding entrepreneurs face is that of presenting their ventures in a favorable light and developing an engaging and compelling account which is appealing for investors. Investors are willing to invest if the objective– market and product stated is available. Unfortunately, in the case of early start ups, such information is rarely available at the time investors make their initial funding decision.
Therefore, I thought of writing this piece of blog to discuss how to attract angel investors, what to include in 1 pager. I have discussed whether it is necessary to develop a business model or business plan documents to make angels and PE invest in your company.
These nine components should form the Business Model Canvas. Seed stage or Early-stage investments typically involve unproven technologies, unfinished products and services, as well as unverified market demand and most of the time entrepreneurs are inexperienced. This means that factual evidence pertaining to the new venture and its quality is often unavailable.
The content stated and claims made by entrepreneurs are subjective and not easy to verify. Further, this imposes conflicting pressures on nascent entrepreneurs on how to create positive impressions on angels or PE to raise funding successfully.
Most entrepreneurs know that investors will consider the market growth potential, product quality, innovativeness, and expertise of the entrepreneurial team. However, the founders don’t know how to correctly project that information.
They may feel tempted to resort to excessive organisational promotion, for instance, by overstating expectations of the future performance of the firm, or over portraying the distinctiveness or innovativeness of its business model, or projecting speedy product development, or the competence of the entrepreneurial team.
They may be shy to reveal their weaknesses or they don’t want to be too modest.
But what is the right approach – should entrepreneurs talk about only positives, or should they also reveal their weaknesses? What should they include ? How to communicate their confidence in the future success of their firm, while simultaneously providing realistic information on their own vulnerabilities.
How should entrepreneurs distinguish themselves from their competition without creating an illegitimacy account ? Would any of these considerations change in the the new normal set up?
We provide mentorship and guidance in this area. We also have customised solutions for you. Please see our page : https://www.nichefin-consulting.com/start-up-consulting/
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Written by: Dr Nisha Kohli