From Entrepreneur To Investor: The Confidence Factor

From Entrepreneur To Investor: The Confidence Factor by Jerome Gentolia: Venturestab

Thermometer: Confidence Level by hang_in_there’s via Flickr

Entrepreneurs should have confidence in their business ventures if they hope to attract investors. How do you show investors that you are confident in the success of your aspiring business?  What can you do to inspire confidence in others, particularly investors.

1. Fully commit your own resources

How would investors react if they don’t see you put any money into your own business? Before you can persuade investors, you must first commit your own time and money to your venture. That part is important. Once you commit your resources to the business, only then will others will follow suit.

In Seven Characteristics of a Committed Entrepreneur, Martin Zwilling says that,:

“we all know at least one self-professed entrepreneur who claims to be committed, but seems to treat it like a part-time hobby, won’t put any personal skin in the game, and is quick to give up when things are tough.”

Total and sincere commitment to the venture is the first step in persuading investors. Zwilling reinforces this by further saying,:

“there are no middle roads to real commitment, and if you are not ready to fully commit to all the rigors of a startup, you are better off sticking with your current role.

2. Persuade others to join your cause

Another thing that investors look for is employee loyalty. It is when your employees are committed to the success of the venture and believe that working for with you in this is their best option.  Not only do they plan to remain with you despite the low pay and long hours, but they do not actively search for alternative employment and are not responsive to offers.

Investors see that your people are convinced of the viabilility of your product or service and, thus, are willing to stick with you.

Mark Suster in Getting Access to the Old Boys’ Club (how to approach a VC) stated:

“we expect you to be able to persuade potential employees to join your cause when you can’t pay them properly, they’ll need to work crazy hours and you’ll always be 9 months away from bankruptcy.  In short, in most cases being an entrepreneur requires a healthy dose of Chutzpah.”

3. Persuade your friends and family to invest

In How to Get Funding from Family, Friends, and Fools, Martin Zwilling writes that:

“investors invest in people, before they invest in ideas or products. Since they don’t know you (yet), their first integrity check on you as a person is whether your friends and family believe in you strongly enough to give you seed money for your new idea. If they won’t do it, then why would I as stranger invest in you?”

Investors would most likely give you additional funding if they see that your family and friends have invested in your business as well. Think of it as an informal endorsement of your venture. Easy as it is, this direction does have its negative side.

Unlike investors who are realistic and experienced enough to know it takes a long time for a return, friends and family are different. Most are not familiar with the startup process and may expect an early payoff or even a windfall midway into the venture. With friends and family investing, be prepared to deal with the emotional investment on top of the financial. This kind of investment gives the startup unnecessary pressure and stress which takes away the much needed focus on the business at hand.

Explain very very clearly to friends and family what they are getting in to by investing in your startup. You wouldn’t want your 60 year old uncle knocking on your door at 8am asking for his money back cause he has bills to pay.

4. Be confident but realistic, exude confidence with credibility, and take a chance, if necessary

From Entrepreneur To Investor: The Confidence Factor by Jerome Gentolia: Venturestab

Presenting With Confidence by Kowitz via Flickr

Like most entrepreneurs, you may find yourself making quick on-the-fly decisions. However, sometimes gut feel is not enough. You may find yourself taking unnecessary risks. When facing situations like these, it’s best to know the limits and tolerance of your startup.

Neil Patel, in What Makes a Great Entrepreneur, writes:

“If you are like most entrepreneurs you’ll end up following your gut and doing whatever it tells you to do. But if you are like a great entrepreneur, you’ll be making calculated decisions.”

Patel also adds,:

“You have to be willing to take calculated risks, but at the same time you have to be willing to roll the dice.” 

A great investor is one who not only is confident enough to step on the gas but is also smart enough to know when to hit the brakes.

5. Persuade customers to use your product or service

Last, but not least, confidence in your business venture is reinforced by how well you’re able to persuade other people to use your product or service. If you’re able to get a good number of people to become your customers, investors would take a longer, second look at your venture’s viability. Once convinced that your product or service is saleable to the average Joe, they may give you the funding you need.

Jerome Gentolia is Co-Founder of ComeUnite and Tech-Launch Solutions.

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