Let's assume you're launching a small business (or you currently run a small business) and you want to raise some money. What will Angel Investors ask you -- and what will the angels expect from you? I gathered some tips from Shark Tank member Barbara Corcoran, who shared guidance during a Onevest webinar earlier today.
First, a little background: Onevest is an online investing site that connects startup businesses with accredited angel investors. Corcoran joined the webcast to help educate angels across the globe. But her guidance also applies to small businesses and entrepreneurs who are seeking to better understand an angel investor's mindset.
- "If you build a giant business, the best days are the early days. The cowboy days when you start the business."
- When examining startups, she's always looking for someone who handles objections and stress very well.
- "You can't lead a business startup unless you're a salesperson. You need sales."
- "My biggest winners take punches and keep moving forward. The best entrepreneurs never feel sorry for themselves."
- "An entrepreneur should be a plain talker -- not talk too fancy. They need to communicate, clearly, why the business works, why it's different, and why it can be a big business."
- "The entrepreneur must prove they can stay excited over the long haul -- for the next five years of hell together."
- "Marketing is half the success of building any business. Got marketing?"
- "Insecure people over-prepare. Always over-prepare. That's a good thing when building a business."
- The smartest "insecure" startup she has seen wrote down every question asked on Shark Tank, and came prepared with two answers per question -- any question -- asked on the show.
Attendee Questions, Corcoran's Replies
- Can you describe a failure?: "Homes on Tape" -- or HOT -- was an idea to video tape all her properties for showings. It failed, but she re-purposed the content when the Internet came online. And she got two quick sales from the effort.
- How important is intellectual property in your decision to invest?: "It's over rated. I'm disappointed to see people pay money on patents before they have a first sale. The right time to pursue patents is after you know people want your stuff."
- How actively involved are you in each startup?: "I spend as much time with a business in year one. If I discover the entrepreneur doesn't 'get it,' I don't spend any more time with them. My money is there but I don't think they'll make it... What you must have is the right entrepreneur."
- What role does "barrier to entry" play in your investment analysis?: "None at all. Another guy will always come along. Barrier to entry is false security."
- What factors play a role in valuations?: "I don't like stuff with pre-revenue. There are too many businesses that have revenue that I can sink my teeth into."
- What is your greatest fear and how do you manage it?: "Everyone comes into the business world with insecurities. That's your friend. Welcome it and beat it. Says F*** You to the insecurity or anybody who raises it."
- How important is market size and financials when investing?: "The weak entrepreneurs fall back to market size when they're pitching their companies. Financials also are over rated. The piece that matters: Sales, cost to produce product and what you sell it for. All the rest, particularly projections... forget it. I projected sales for 25 years and I never got it right. Life happens. Industries change. The game changes."
Special thanks to the Onevest team for inviting the After Nines Inc. team to the webcast.
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