This past week The Cove at UCI Beall Applied Innovation held one of the best tech startup funding events that I’ve encountered in Orange County.
Called “Face to Face with Investors,” the event featured panels and roundtable discussions led by more than 40 venture capitalists and successful entrepreneurs from Tech Coast Angels, OCTANe, Mucker Capital, K5 Ventures, Cove Fund, Koa Accel and others providing advice and insights to tech startup founders and aspiring entrepreneurs.
It was standing room only in The Cove’s main venue with over 100 entrepreneurs, most seeking initial seed money for their ideas with a few ready for Series A investment. There was lots of energy in the room, panel moderators kept things moving along with great questions, and the audience was fully engaged.
Here’s my takeaway of the top 10 tips for tech entrepreneurs seeking funding:
- CONVICTION – This word was mentioned several times by investors and company CEOs as the key to success. My take: if it’s clear that you believe in your idea, others are more likely to as well. How you tell your story – with a passion and confidence reflected in your eyes, voice and body language – can be as important as what your story is.
- TELL A GOOD STORY – While many tech entrepreneurs are engineers, they must get out of the mind-set of focusing on the technology alone and learn to communicate the emotional part of their company’s story. In other words, describe how it will help people, whether it will save lives or simply keep a customer from pulling their hair out. One investor said he’s seen the impact of good storytelling lead to funding without so much as a product prototype.
- EXPLAIN THE PROBLEM – Again, most tech entrepreneurs want to jump into the details of their solution. However, the solution is secondary to communicating the problem. Investors want to understand up front if the problem is compelling enough that people would be willing to pay for a product or service that solves it.
- THE ELEVATOR PITCH IS IMPORTANT – Yes, it’s true – don’t underestimate the power of a simple, brief pitch about your startup. Panelists recommended practicing your elevator pitch in front of a mirror, your friends, the cat – whatever it takes to tell an effective story in a couple minutes or less. One entrepreneur said her elevator pitch to an investor at an event led to an introduction to decision-makers at Pinterest. Have your elevator pitch down cold.
- GET OUT OF YOUR COMFORT ZONE – Investors will take cold calls and read unsolicited emails, but nothing works better than a ‘warm introduction,’ i.e., you came up and spoke to them in person. For many tech entrepreneurs, this means getting out of your comfort zone and introducing yourself to everyone you can. Starting conversations with strangers is an indispensable part of the funding process.
- INTELLIGENT FOLLOW-UP IS ESSENTIAL – Investors say that providing updates on your progress once a month or whenever it makes sense is necessary for success. Even if it’s an investor you met only once, or someone who has turned you down, indifference can turn into interest, and “no’s” can become “maybe’s” by hitting milestones and showing traction.
- KNOW YOUR INVESTORS – Seems like a no-brainer but investors said many entrepreneurs don’t start with the basic research on who would be the optimum VC for their idea. In addition to finding people who previously have invested in your space, also talk to funded entrepreneurs and get their insights on personalities, general funding practices, processes, etc. Never go in blind to an investor pitch without thoroughly understanding your audience.
- FIND SMART ADVISORS – You don’t know everything – find people who can fill the gaps. Often this assistance will come from the investor. “Smart money” can be better for the long-term prospects of your startup than big money. Also, if you are still in early stages, join an incubator where expert counseling in accounting, law, HR and more is available.
- NEVER LIE – To a person, investors said this is a deal-killer. If they can’t trust you, investors won’t invest. It’s understood if you’re projecting future growth that those are your best estimates, but don’t misrepresent even the most innocuous facts about yourself or your firm. Pitch deck misspellings or messy capitalization tables can be overcome by a good idea and a compelling founder presence, but a lie won’t.
- GRAB THE BRASS RING – This tip is mine. My impression is that these investors are hungry for solid ideas and trustworthy founders. I was surprised to learn that most of the VCs take everyone seriously and will get back to you on your pitch within a few weeks. Don’t count yourself out. They will provide funding for good ideas that will make their investors money. So, if you believe in yourself and your idea, go for it.