Investment Scouts Switch Gears In Tough Economy
Start ups ain’t what they used to be. . .
It’s been a while since easy money was easy. The days of nailing an investment round with a clever idea and a quick pitch to a VC or investment banker flush with cash disappeared to the same bright Camelot as did all the weekend symposiums teaching the perfect elevator speech. There was market tolerance for investment risk that simply doesn’t exist today. If you think funding will flow your way because your concept is irresistibly brilliant, think again. These days you need more – a lot more. The investment landscape was different in the last century. Between biotech, dotcoms and internet hardware hucksters, there was so much opportunity on hand that failure of most start-ups was acceptable. One Yahoo made up for six bad shots. Rapid growth drove short-term investment strategies. In their haste to claim market share, Investors often plunged headfirst, then left the party fast, moving on. Concepts trumped execution.
So failure is okay, you may ask? In case you haven’t heard the news from Lehman, those days are over.
Don’t get the wrong idea: There’s still plenty of money. It’s just that investors have matured beyond dating start-ups. Now they want to marry them. Flash and sizzle no longer count. Results and a track record do. Proven execution means reliability and shelter in the storm, and it is stormy out there. Investment will follow a solid opportunity, but it’s up to you to start your own enterprise, because in this economic environment, investors won’t.
So, after you’ve begged, borrowed and stolen enough to get your company going, to get your horse out of the gate, where do you go from there?
Reliability means executing a business plan with meat on its bones, a credible plan with vision, accurate numbers, and down-to-earth assumptions. Investors will make you prove you can execute to your plan, too, even if you’re just starting out. They’ll demand evidence you practice what you preach before throwing initial funding your way. Then, in order to lock up continued funding, you’ll be on the hook to show an expanding customer base, market leadership, increased sales and margin. Credibility means realistically planning your growth. If you can’t do that, you’ll never grow.
Credibility with investors also mandates a clear, detailed, nuts-and-bolts vision for evolving your corporate structure as you grow. These guys think big: How will your financial, ERP, CRM and other systems evolve with the business? Quality? Business continuity? Customer experience management? How do you support these critical functions when you’re small? What will you look like three years from now? At what stages do you add headcount/cost? Where are self-sustaining plateaus, the steps in between? When? How do you rationalize vertical markets, going global? Just like investors have grown up, what do you want to be when you grow up too?
A winning technology or brilliant idea is just the beginning. Partnering with experts like Thomas Financial Services, LLC, www.thomasfinancialsvcs.com who specialize in connecting you with the investment community, can get you off the launch pad faster, get you to market in time to claim the top of the hill. Business insight helps you tell a better story, build a bullet-proof plan, makes you a better company. Of course, connecting companies with investors is more than just tuning up an enterprise; Playing from the money side, savvy investors rely on such experts to offer insightful, fast, third-party analysis of emerging opportunities and the people who run them.
Great concepts fall flat in the hands of losers. Weak concepts usually thrive with a winning team. Proving you’re capable of sustained, incremental, planned success is your single greatest keystone to credibility. Growth has slowed today. Investment is tough. Make investors believe in you. Getting help by partnering with a winner in harsh economic conditions may be the best investment you make.
Filed under: Computers & Technology