Funding: Brock Blake

 

Want Funding?  Start Executing

 

Let First-time entrepreneurs have it tough.They are fighting the most basic principle of venture capital: Investors invest in the jockey, not the horse. (Translation: Investors place more weight on the quality of the entrepreneur than the quality of the idea.)

This is great news if you're a well-known jockey like Will West, Alan Hall, or Josh James. But what if you're a first-time jockey riding a young horse no one has ever heard of? What if you're a first-time entrepreneur with a great idea and tons of energy, but no reputation or track record?

Start Executing, NOW!

When asked the question, "What should I do first to raise money?" I respond with a short and emphatic, "Start executing, NOW!"

Make no mistake about it, an entrepreneur does not need to raise capital in order to build a successful company. However, an entrepreneur must be able to execute. When it comes to execution, there are three things investors are most anxious to see.

Three Ways to Prove That You Can Execute

1. Sales Revenue. One of the most compelling parts of your fund-raising pitch will be to show that you have generated substantial revenue. Investors want to determine if the "dog will eat the dog food." In other words, will customers buy this product at a high enough price to create a profitable company?

Boasting substantial revenue is important because it tells the following story:

>> You already have a product/service in the market. Most investors prefer not to invest in a company until the product development is sufficiently advanced to where the product or a prototype of the product has been shown to customers. (Of course, there are some exceptions.)

>> You are focused on sales and marketing. Entrepreneurs often understand products, technology or finance, but have little understanding of sales and marketing. Investors want to know that entrepreneurs understand the importance of sales and marketing and have management team members focused on making sure customers get what they want.

Just think, it may be that you don't have to raise any money because your sales revenue is sufficient to fund your growth!

2. Early Commitments from Customers. If your company is in the early stages of development and has yet to report any substantial sales revenue, the next best proof of execution is to show investors who will buy your product once it is complete.

For instance, at Funding Universe's last Southern California Speed-Pitching Luncheon, one of the top-presenting entrepreneurs, Ravi Tripuraneni, had 119 signed letters from potential customers who would purchase his product when it was ready.

3. Surround Yourself with Experience and Expertise. Another way to show you can execute is to surround yourself with talent. If an experienced professional steps up to join your management team or advisory board, it communicates to investors that you are building something valuable.

It is also appealing to get an investor on board who has significant industry experience. In many cases, that presence alone will validate the investment opportunity for future investors.

The adage that "investors invest in the jockey, not the horse" is true. If you are a first-time entrepreneur, show you can execute by driving sales revenue, getting early commitments from customers, and/or building an experienced team. $

As CEO of FundingUniverse, Brock's goal is to connect qualified entrepreneurs to active angel investors. For questions or feedback, feel free to reach him via e-mail at brock@fundinguniverse.com.