The top 3 things an investor never wants to hear from a founder

For an investor, listening to pitches can be exhausting. It also can be a little stressful. Investors use their business acumen and what a founder tells them to determine if 5-10 years down the road, the company they want to invest in will still be viable and hopefully be sellable. Though it sounds easy, spending thousands, tens of thousands, or hundreds of thousands of dollars of your own money based off the statistics that 65.5% of business fail after 10 years is not for the light-hearted.

Investors can hear thousands of hours of pitches and tens of thousands of pitches. Some with great ideas and many that just are not investable in the moment and time the pitch happens. I’m going to try not and vent here but I wanted to talk about the most common things I’ve heard from Founders that have turned me off from investing completely. Let’s start at number 3.

3. I don’t know what I’m going to use the money for.

If you’re searching for funding dollars and you can’t tell me what you need MY money for, I want you to get out of my face because you’re wasting my time. This is the sign that you’re not a strategic thinker to me and you’re likely not looking for funding for the right reasons.

The fundamentals of searching for seed funding is to:
1. Identify how much you need
2. How much equity you’re willing to give up for that amount of money
3. What you’re going to use the money for

If a founder asks me for $1 million, I want to be clear on what they’re going to use my money for. What if your partner or parent asked you for $20,000. Would you want to know what the money is for?

2. Everyone is my target market

When I talk to people about their target market, I always give the example of Target versus Wal-Mart. Though they sell the same type of products all over the world, you will find their store layouts are different and the people who come into the stores look different.

The purpose of a target market is to have a target! If you think of darts, you have a target. Within that target, you have different areas. Your goal is to hit the bullseye, right? That’s one area, the primary area. Now yes, you will hit other areas but the goal is this one area. The same applies to business. You will target a specific type of customer. With more sales and marketing, you’ll end up reaching other types of customers. If you are looking at the data, your market may change or expand. The point is, you must start with a focused area.

1. Last but certainly not least, I have no competition

If you’ve read my book, you heard this story already. I went into an investment meeting with a new restaurant owner where we toured his location. As we were leaving, I ask him who was his competition and proudly he told me he didn’t have any competition. Standing at the front of his establishment, you could see multiple restaurants. Some mom and pop restaurants and some big brand restaurants. His thoughts were that no one cooks the food his cooks like he cooks it so he had no competition.

No matter what business you have, you will always have competition! In this day and age, there are unicorns and novel businesses but there’s also alternatives to choosing another business.

As a founder, if you feel any of these three ways as it relates to funding or your business. I ask you to do a reassessment of what your business is and what you need based on the direction you want to take. That’s all I have for today. I’m your host, Adrian T. Marable.

Until next time, and remember, “If you have different mindset, you will have a different outcome.” – Jack Ma

Reference:

(Business Failure Statistics) LendingTree