Inside The Investor Mind!
Inside The Investor Mind – Brief No. 001 – Money is not everything… Not!
Over the past six months, we have listened to a startup pitch, after startup pitch, and I noticed something, an observation worthy of discussion – more like clarifying a misunderstanding. You often hear people saying during a pitch: “Money is not everything!”.
Well, as an investor, let me say this “Money is not everything – money is the ONLY thing!
Often, the startup founders and I are not on the same page in regards to the definition of business. In the eyes of the investor, “Business is a structured legal entity that is designed to provide products and or services for the purpose of making MONEY, as much as possible, as fast as possible, and as long as possible”.
I know it is a bit pragmatic. However, investors invest with the prime objective and intention to get maximum return on their investment. Some investors have other motivating factors, yet the majority of investors do it because they desire to increase their (and their family’s) net worth. It is that simple. Generally, if a particular investment produces a value, such as making life better, making a positive impact on society, or saving the planet, it is an added value, but not necessarily a primary decision factor.
As a startup founder, you need to know that the investors hear your pitch as, “blah, blah, blah Money…, blah, blah Money!” Remember, investors, invest in people, not businesses. If the investors do not get the impression that the startup founder is interested, REALLY interested, in making money, hh…it is an issue.
Here are your Power Tips on what the investor is looking for during a pitch:
- Do I believe in this driver(s)? It is almost like “love at first sight”. As an investor, I want to fall in love with the founder. After all, it is like a first date, and based on my “first date” experience, do I want a second date?
- Do I want him/her/them as my partner(s)? The moment that I am investing in the business, I become a partner, my name is now associated with the company. Do I want them as my partners?
- Do I trust him/her/them? The first impression is a false perception. As investors, based on that first impression, we may decide to trust or not trust the person in front of us.
- Do they understand what it will take? REALLY understand, in practicality, what it will take to get to the finish line. Do I think they can drive us to the promised land, or not?
How do I get my money back and how long will it take? – Show me how you will make sure I will get my money and how long it will take.
- Do I believe that you will take care of my money as if it is your own, not just someone else’s money? Pitching to investors is like a first date. The impression (and perception) you make determines if you will get a second date. It is not to say that there are other critical factors involved in making a deal, yet you need to pass these filters first.
The fact of the matter is that if you are REALLY interested in making money, you will more likely, or at least increase the probability of making it. Money is not a disease or an evil thing; it is just The Key to whatever kingdom you want to build.
First, we will focus on making money, and then we will decide what to do with it: keep it, donate it, spend it.