Investors prioritize the founding team above all else, looking for commitment, passion, grit, resilience, and capability. They want to ensure founders are in it for the long haul and can overcome adversity.
What this video covers
The founding team is the most important element when you are asking investors, “What do you look for in a company before investing?” They always say, “Team, team, team,” and then the rest comes after.
One of the first things that investors are going to look for is commitment. They want to know if you are going to be able to sacrifice the things that you need to do in order to be part of this journey and execute.
But at least that 5% of the good days and the passion that you have in this is going to help push you to the top. You can’t fake passion and commitment. For that reason, the investors want to know if you’re going to be in this business for the long run because it’s all about persistence. It’s not a sprint; it’s ultimately a marathon, and this is what they’re looking for.
The next things are grit and resilience. What are some of the examples on how you have behaved during moments where adversity was present?
Next is capability. What makes you and your team capable? Those investors are looking at your space. They’ve made a decision of investing in your segment. They’re probably even meeting with your own competitors.
So, what makes you different than others? Why do you deserve this money? Do you have the domain expertise, the experience, the network? What is it that makes you different, that makes you unique, and that really makes that investment more desired being placed in you and your company versus putting it in competitors?
The investors also want to make sure that you’re coachable, that you’re able to listen. Remember that the investor is investing in you because they believe in you, but they’re also investing because they want to help you in building the business.
Are you willing to listen? Are you coachable? Those are the things that the investor is going to want because, especially if they’re investing a substantial amount of money, they’re going to want to take some type of control and even be part of your board of directors in designing that strategy that ultimately you and your team, your management team or executive team are going to go out and execute and take to the finish line.
Can you get along? This is another big one. Do you see yourself with that investor? Maybe if you were to miss a flight, would you be okay having a beer with them, having lunch, having dinner, being able to enjoy each other’s company? This is critical.
There are people like Peter Thiel that have said that they would never invest in people that they can’t really get along with. Again, you want to have that connection. You want to build that meaningful relationship with the investor so that they really feel confident that it’s going to be worth their time, that they’re going to enjoy, and that they even learn from you. Those are critical aspects. Again, it’s all about having that meaningful relationship.
Are you trustworthy? Again, trust is built on integrity, and integrity is being able to deliver on your words. If you’re actually setting yourself or making the promise that you’re going to be accomplishing certain numbers or delivering certain types of milestones, you need to be in communication.
In the event that your team is not strong enough, that’s totally fine. The investors, especially the earlier that you are in the journey of your business, they’re going to be okay with the fact that you’re going to have to hire later on. At least what you need to showcase here is that you have a clear roadmap, that you have a plan, maybe even candidates that you can show with them, and perhaps even enroll the investor in that journey of hiring the talent.
In many cases, those investors have access to a great pool of talent, so maybe they know someone that they can bring in. Just be clear and be honest. If you are missing certain candidates in certain roles of the business, share what those candidates are and what you’re planning to do about it so that you can fill in those roles, and perhaps even the timeline of filling those roles.
