As you're looking for investments, you may be tempted to focus on your priorities versus those you're seeking investment from. This temptation comes from the very human habit of viewing the world from your standing point, versus that of the person next to you.
When you're pitching to venture capitalists - be it an individual or a firm - you can't afford to ignore their priorities for investment.
What do Venture Capitalists Want in a New Investment
In their lecture How to Raise Money, Marc Andreessen and Ron Conway noted when they look for an investment, they focus on the idea to "invest in strength vs lack of weakness."
You don't need to be flawless. In fact, investors expect flaws. You're growing. Instead, you need to focus on showing your strengths. It's your strengths they'll invest in as your strengths show your potential in all areas.
How to Show Your Strengths as a Worthy Investment
While you'll need to come prepared with the metrics and data that are prioritized in your industry, proving strength in the following four areas will be essential in converting an investor:
- Be prepared with data-supported proof of market. If there's no market, there's no money! A venture capitalist invests to make money, not to just help an entrepreneur!
- Present a clear differentiation of your product. You should be able to articulate and prove your product or service can't be replicated easily by a competitor.
- Demonstrate a solid management team. Remember, a venture capitalist is going to own shares of your company. They will, therefore, be working with you to keep an eye on their investment. They'll want to know you have a strong and untied management team.
- Show you have a strong brand established. A successful brand can make or break a company. In reality, if you don't have a brand, you don't have a company.
Of all of the priorities of venture capitalists, the one that seems to be misunderstood or undervalued in a pitch is successful branding. However, strategic and well-done branding is one of the better indicators of a solid investment for a venture capitalist.
The Value of Branding for Venture Capitalists
The value of a brand for venture capitalists is primarily twofold. First, a successful brand gives a company value beyond any product. And second, your brand conveys the tone, feel and overall messaging of your company. As such, your brand can tell an investor if you and your company are a match for their values.
Excellent Branding Predicts Longevity
Jaiden Vu, Founder, and CEO of Vantura Cosmetics emphasized the importance of branding in the digital age in her interview with Forbes;
“As a business, your job is to sell a vision, not just a product,” says Vu. “You sell that vision right, and the product will sell itself. Ask yourself: what is your story?”
Your branding articulates your vision to your target customer. It's your vision customers connect to, not your product.
In the make-up industry, there are literally billions of available products. In this industry, a high-quality product is just another drop in the bucket. Success in the beauty industry depends on personalized branding that'll last generations past any eye-shadow palette lifespan.
Your brand shows your potential to evolve past your initial products. It's what your customers become loyal to and building customer loyalty is a huge factor in your business's longevity.
When you approach a venture capitalist, your brand should be able to show how you'll capture new audiences and maximize growth.
Branding Indicates Investment Compatibility
Venture capitalism is an industry in which decisions are made in a matter of seconds as eager entrepreneurs pitch for investment daily.
A strong brand won't simply capture the attention of an investor but it'll establish the values, tone and overall feel of your company. Your brand is your company's personality.
For an investor on the scale of a venture capitalist, the personality of your company is as significant as any data you'll present. A venture capitalist is buying into your company. This means they'll be working closely with you and having a say in your future business decisions. Compatibility is key to making the new dynamic work.
The Unique Ethos of Investors
Every venture capitalist is going to have their own personalized interests and values as they invest that really have nothing to do with your companies proof of market or any metrics.
Your brand design and strategy show your compatibility to their investment ethos. Your brand decides if they'll invest or if they'll move onto the next.