How Investors Spot the Top-Notch Hustlers

No “fake it ‘till you make it” here. This is how to let investors know you’re the real deal.
by
Funding
January 28 | 7 mi

What does it take to get your startup going? Money. Part of the journey toward a successful business venture is recognizing the potential as well as the risks of raising capital. While finding investors to fund your company can be difficult, it gets much easier if you know exactly what these investors are looking for. Qualities and personalities of startup founders matter, so here is a list of a few characteristics investors are often looking for:

Clarity Between Idea and Execution
Never propose a half-baked idea to investors. You need to be able to answer any and all questions thrown at you — they want to see you’ve done your research. They look for founders with clarity of thought, which is critical for showing potential investors that you not only have a million dollar idea, but also a clear line of execution. After all, what’s a good plan if you can’t follow through? Anyone can come up with an idea that’s worth something, but the ones who succeed are those who have concrete plans to turn those ideas into a reality.

Passion and Willingness to Work
In the sea of budding entrepreneurs, only a handful are in it for the right reasons — some start businesses out of passion for the projects they are working on, while others may just be focused on potential money or success. The more selfish or dishonorable an entrepreneur’s intentions are, the harder a time he or she will have trying to secure funding from investors. These investors want to see entrepreneurs who put their hearts into their startups because passion drives success. Vasu Kulkarni of Courtside VC says, “the conviction to solve a problem is always stronger when you are passionate about it.” If you are authentic, dedicated, and passionate, investors will be much more likely to fund your business and get you one step closer to achieving success.

Ability to Welcome Advice from Others
Investors look for founders who have the ability to listen to different viewpoints and keep an open mind. While building your business, you will face some obstacles, so remember that there is no set way of doing things. Open communication with your investors instills a sense of trust and mutual understanding that will be beneficial for both parties involved. According to Todd Hixon of Forbes, “understanding, communication, focus on the shared upside, and balancing interests will enable you to take advantage of the mostly-positive founder/investor dynamic that underpins the huge success of the U.S. venture ecosystem.” Although they can be challenging and complex at times, the relationships between founders and investors must be constantly cultivated in order to ensure that your business operates smoothly at all times.

Dedication to a Strong Team Dynamic
Establishing a huge team to work on your product 24/7 does not guarantee success. Rather than just team size, investors also look at team chemistry. Andy Karuza of FenSens talks about team dynamic when asked about key qualities investors look for, explaining that “a passionate, driven team can outperform a team 40 times its size that is not passionate about its work.” Chemistry between the founder and his or her team members is important to investors because it assures that all people involved in the business are deeply motivated and working diligently toward success.

Excellent Problem Solving Skills
While building your business, problems will arise and founders must be quick to find effective solutions to resolve them. Investors want to see this tenacity in problem solving, especially if the heads are first time founders. It’s only natural that you encounter difficulties in the beginning of your very first venture, so it’s important to show investors that you can power through. Aaron Swartz of Passport gives this advice to new founders: “be willing to seek out answers from advisors and other entrepreneurs — even from the competition — and you will demonstrate that you have the ability to succeed.” As a founder, you should prepare for any obstacles you may face by collecting valuable advice and developing a repertoire of resources and problem-solving skills.

Overall, establishing and maintaining a strong relationship with an investor is a major accomplishment for a startup founder, especially if he or she is new to the world of entrepreneurship. While founders must first and foremost prove themselves to be genuine and dedicated to transforming their ideas into successful realities, after they secure funding, they must also put equal efforts into maintaining relationships with the investors who are helping to fulfill their dreams. A strong founder-investor relationship can be mutually beneficial as long as both parties communicate and collaborate efficiently while working toward a shared goal.

 

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