How Do I Get Investors to Take Me Seriously?
The best way to get investors to take you seriously it to make it crystal clear that you do not need them.
If you are in the position where you can communicate very clearly based on your startup’s performance, financials, and traction that you are fine on your own and do not “need” them, but that you merely “want” them to scale faster, then you will have instant credibility and even have them begging you to consider an investment. You know you have credibility when they start trying to sell you on why you need to grow faster with growth capital.
In other words, you need to demonstrate the following three characteristics:
A proven offering with a compelling value proposition that serves a large addressable market
Enough highly-satisfied customers to prove the first point
Sufficient revenue and earnings that you can survive and grow slowly given your current cash flow and working capital dynamics (and, importantly, you can clearly survive without any external capital)
If you have the above going for you, then I recommend that you have a few different scenarios modeled out in different pro formas (I built the Startup Financial Model app to make this easy) as follows:
Your slow and steady growth scenario - the one you are currently pursuing that you are happy with and can sustain
Your $1m of growth capital scenario - showing a higher growth ramp and how you would use the capital to grow faster (think sources and uses in terms of how you would effectively employ the $1m)
Your $5m of growth capital scenario - same as above, but with a steeper growth ramp
Your $10m of growth capital scenario - same as above, but with even a steeper growth ramp
Your core message is that you are really onto something good, but you are merely exploring the idea of taking on capital to grow faster. You are now in the position of evaluating what the growth capital means in terms of potential growth and what happens to your equity value and you are really in a great place to understand for yourself whether or not you are better off with a venture capital investment. And, of course, you are playing a little hard to get. This type of communication and approach will make you a very attractive target for potential investors.
The last thing you want to do is to come at VCs with the stench of desperation of “I need $__m of capital immediately!”