Every entrepreneur needs a strong support system if they are going to bring their vision to fruition. While I didn’t start out as an investor — my beginnings were much more entrepreneurial — I’ve had the privilege to serve in that support capacity since 1990.
As an angel investor, I’ve invested in more than 140 companies. Some have made headlines while others have flown more under the radar. Some went on to become incredibly successful, while others, despite hard work and dedication, eventually sputtered out. Needless to say, in my decades of experience focused on digital media, mobile applications, and Internet security, I’ve learned a lot about the difference between wise investments and foolhardy dreams.
While my efforts are almost exclusively focused on the southeast United States — 98 percent of my investments have been in Atlanta-based companies — what I’ve learned has broad applicability. At this point in my career, I hope that the next wave of entrepreneurs and the investors who will undoubtedly support their projects can benefit from my experience.
To be sure, there are many reasons I believe in venture capital. Most prominently, as the Brookings Institute notes, “when venture-backed deals do pan out, they create an explosive growth dynamic, seeding the creation of additional local startups. These follow-on effects can foster a robust innovation ecosystem that helps sustain growth.” Simply put, successful startups are uniquely beneficial to founders, employees, investors, and entire communities.
I want visionaries to learn how to pitch their products more effectively, and I want investors to more selectively choose those who are most likely to succeed in the years ahead. For entrepreneurs, some advice just makes sense: Talk to your leadership team, learn about the market, and read the papers. Of course, it takes much more than that to pitch a project successfully.
With that in mind, here are six principles for entrepreneurs that can help ensure their pitches are heard and that their projects continue to advance:
- Don’t be afraid to be passionate.
Passion is an underrated quality in an entrepreneur. It may be difficult to quantify and assess — I often rely on gut feeling — but passion is essential. Successfully guiding a startup to maturity is an arduous process, so if the person pitching the company isn’t passionate about what they’re doing, then that project isn’t worth my time.
Admittedly, passion isn’t everything it takes to be successful, but venture capitalists are still assessing the people as much as they are the project. Therefore, it’s important to be:
- Engaging. Investors want to work with people who they like.
- Open. Investors want to know that you are willing to share everything with them, including obstacles and weaknesses.
- Available. Investors want to know that they can talk to you and your team at any time. Answer their calls, reply to their emails, and prioritize timely communication.
- Coachable. The right investors aren’t just looking to pump money into your project. They want to help teach and train you and your team to be successful.
- Capable. Investors want to work with industry experts. The founder doesn’t necessarily have to be an expert, but somebody on the team has to be.
Ultimately, I invest in people, not just projects. I’m looking for men and women who are great leaders with a compelling vision and the right experience that can make the project a success.
- Pursue scalable projects.
Tailor your product or platform to address markets that aren’t already saturated. I’m interested in helping entrepreneurs meet their growth milestones so they can continue on a path to high valuations and levels of success. Therefore, if your project isn’t scalable, then it definitely isn’t ready for venture capital to step in.
- Deploy an effective employment strategy.
As I mentioned before, people are critical. Too often, I encounter entrepreneurs who have incredible ideas, but who can’t assemble a team. Successful leaders know how to find, employ, and develop the right talent.
Your team needs to be consistent and pleasant to work with both socially and in business. As an investor, I’m evaluating the entire team. Successful entrepreneurs will begin developing their teams from day one.
- Evaluate the risks.
Aspiring entrepreneurs need to evaluate the risks of a new business venture, and they need to assess the level of risk that they can manage. It’s important to understand if you can afford a reduction in cash-flow, and if so, how flexible your finances can be.
Entrepreneurship isn’t for the faint of heart. It can be a grueling process with few financial guarantees. Most importantly, all stakeholders need to be involved in this assessment. For example, if you’re married, your spouse needs to understand the risks and be all-in for the process.
- Know your competition.
I have very little patience for entrepreneurs who assert that they “don’t have any competitors.” It reflects a hubris in their originality and creativity that rarely holds up to scrutiny. Similarly, those who provide “conservative” estimates often fail to appreciate their competition, which often dissuades me from investing in a company.
In short, I don’t want to discount originality, but startups need to appreciate their role in whatever industry they pursue and recognize that it’s likely not as novel as they might think. This is a good thing, as it prompts a more realistic risk assessment while illuminating areas for continued innovation.
- Be prepared to answer tough questions.
Investor pitches are well-rehearsed, best-case-scenario presentations on a company’s possible efficacy. Undoubtedly, they are informative, but I learn infinitely more from the after-presentation Q&A. I want to know that entrepreneurs have more to offer than their speech. They should show that they have a deep well of knowledge, experience, and perspective from which to draw.
Building a business is difficult and requires a great deal of hard work and fortitude. But the thrill of watching a good idea grow from mere concept to a thriving operation is boundless. I’m grateful for the role I’ve been able to play in the creation of many successful, innovative companies, and I look forward to seeing what great things today’s young startups will achieve. It is my hope that sharing my investing experiences will help to pave a smoother path for their journey.
Get involved in the “Siggie” Awards for 2020 to recognize some of the unsung heroes in the Atlanta startup community: early-stage investors. Nominate an Atlanta area early-stage investor who you think deserves recognition at http://siggieawards.com by March 31! And grab your tickets early for awards night on April 16, starting at 4pm.
About the Author:
Sig Mosley serves as the Managing Partner at Mosley Ventures, LLC. He is a committed and community-driven early-stage investor (some call him an angel) who has contributed to making Atlanta THE tech startup capital of the Southeast. Over the years, he has invested in over 140 startups with many of them culminating in liquidity events with successes like Tradex, Clearleap, FSLogix, ISS, Witness Systems, and many more.