A good number of today’s funded start-ups provide incredibly useful technology but lack a marketing strategy or coherent business plan. To many observers, the old rules that once governed investing in startups have gone out the door. It may seem that wisdom and experience, as well as the necessity of projecting a “professional” image and demeanor, are outdated concepts. They simply aren’t valued, or at least not really suited to the world of technology start-ups.
But the reality is that no matter how casual and informal the current culture is and may yet become, certain traits and attributes will always matter to those who invest in start-ups. Here are four traits that, especially when demonstrated during fundraising, are sure to help entrepreneurs earn the respect and confidence of, and ultimately desired funding from, the investor class.
1. Leadership ability
Investors want to fund ventures run by leaders, not problem-solvers. This statement may not seem logical, at first. Who doesn’t want a problem-solver on the team? But that doesn’t necessarily mean this person belongs in a leadership role. Investors will ask tech entrepreneurs during pitch meetings, “What problem are you solving?” Because technologists are the ones launching many of these early-stage, high-valuation companies, they’re apt to answer with a technology explanation. The thing is, being able to explain what you’re going to accomplish and what problems the technology venture will solve actually says nothing about what kind of leadership skills you bring to the table.
According to McAdory “Mac” Lipscomb, a long-time advisor to startup CEOs, “The answer that I recommend to every one of these guys that I coach, and I probably coach 20 companies a month — if they‘re asked, ‘What problem are you solving?’ — shouldn’t be [about a problem] at all. It should be, ‘Well, actually I’m not solving any problem. Consultants solve problems. But I am an entrepreneur that has identified a business opportunity that is going to make a lot of money, and let me tell you about that business opportunity.”
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