Founders, Be Investable

I often come across founders griping about attracting investors. Often, they haven’t spent much time networking at all. They’ve spent more time thinking about their working capital problem.

But, more importantly, many founders simply don’t come off as investable. At all. This is because they don’t have a professional business background. And many aren’t that into money per se. 

Remember, the earlier in the life cycle of the business (when the check is a lifesaver in many cases), the more the investor is investing in YOU. That’s actually a great reason NOT to give them much equity at all, indeed not equity based on traditional valuation math. There’s a reason Sharks ask for 30% of a sub-$1M company for $150,000. But that standard valuation math is like using an electron microscope to determine if your yogurt has mold on it. Come on. Run. This is predation, not investing. 

Being investable involves two axes of professional competency:

1. Deflecting predators
2. Displaying disciplined ambition
   

Let’s start with disciplined ambition.

Appearing ambitious from a business perspective is not about beating your chest. It’s not about showing passion for your creation. Investors do want to see passion, but they expect that. What they probe for is passion connected to a serious commitment to running a disciplined business. Disciplined ambition is what they want to see more than passion. Passion can be faked on a podcast interview. Disciplined ambition leaves a trail of decisions and internal practices that investors can study like an anthropologist. It’s harder to pretend this. Develop internal practices that show you are tracking data on your business and holding yourself accountable to goals. Disciplined businesspeople are ALWAYS accountable to previously stated goals.

Deflecting predators is much trickier.

The ‘trick’ here is to have a built-in practice of networking with angels and updating them about the business as interested parties. You must do this BEFORE asking for anything…anything…even referrals to other pocketbooks.

If you have, say, 10-15 wealthy angels already tracking your business, it becomes much easier to do what I suggest next. Play hard to get with anyone who approaches immediately trying to invest. 90% of the time, these are people shopping for ‘victims.’ They prey on women and minorities. They think they’re helping, but usually, they are a nightmare to deal with. Savvy investors don’t chase deals. Especially angel deals. They sit back and wait for you to display a disciplined ambition in the form of networking. Boom!

Good luck out there.