Wednesday, October 29, 2008
Posted by Lynn-Ann Gries
As JumpStart ventures into the "blogosphere" and I am asked to contribute, I can't help but wonder what, on earth, can I possibly add to the ‘sphere? There are already a bunch of great blogs out there (VentureBeat, A VC, Infectious Greed by Paul Kedrosky, and Founder Frustrations by Noam Wasserman - to name just a few) devoted to venture capital and starting companies. (One of my personal favorites is Feld Thoughts by Brad Feld. Not only does Brad write about relevant topics in a clear, easy-to-understand way, he also provides links to other great blogs and indexes his blog by topic so you can zero in on specific topics.) What can I possibly add to this already crowded collection?
In my position, I am privileged to see many of the new early-stage business ideas in Northeast Ohio. Over the past four years alone we have received over 1,400 inquiries from entrepreneurs seeking funding and business assistance. This is a tremendous amount of activity for just Northeast Ohio; much more than we ever thought. JumpStart is selective; choosing to work with those entrepreneurs whose business ideas have significant high-growth potential (for this we've been both lauded and criticized but I will leave that debate for another post). What I can share are my observations about how entrepreneurs communicate their ideas to funders and how they can improve their chances of a funder taking the time to listen.
First, take time to write a clear and compelling three to five page executive summary. Edit and re-edit. Get feedback from your friends and relatives, preferably those who know nothing about what you are doing. Is the topic explained simply enough to be understood by non-technical folks (a great test - can your grandmother understand it)? One of the most important questions you need to answer is "What pain does this product/service/technology solve?" Identifiable pain means an easier sell and, presumably, a quicker path to revenue.
Second, understand the funder's criteria. If the funder is an angel or venture fund, they'll want to see high-growth businesses that the founder is willing to ‘exit' (i.e. sell) within the next five to seven years. It may sound simple, but don't approach VCs if you are a family-owned business looking for growth capital and you want to pass the company on to your kids.
Finally, be an expert. Funders, for the most part, are jacks-of-all-trades, masters-of-none. They look at a wide variety of deals in all types of industries. They are expecting that you, the entrepreneur, know everything there is to know about your product/service/technology. Be sure to know what comes up on a Google search of your topic. If a funder asks you about ‘XYZ Company' that seems to do the exact same thing you do, don't let that be the first time you've heard of them. Be prepared.
Those are just some quick thoughts gleaned from my personal experience which, coincidentally, echo much of what I've read out there in the ‘sphere. Clarity, understanding and expertise - a great trio.