When it comes to fundraising it is critical to not only communicate your adaptability and the viability of your product, but to prove the business model too. It doesn’t matter how brilliant your software is, or how innovative your idea is, if you cannot demonstrate that you have a proven business model, you will have difficulty raising money.
In pitches, venture capitalists and investors are, naturally, asking themselves the all-important question: “What’s in it for me?”. As a result, rebel entrepreneurs must prove their viability if they want to maintain their potential investors’ interest, and secure the funding.
I happen to have first-hand experience in this. In 1997, I returned from the US, eager to establish my own company in Ireland. Without showing success in getting one deal in this new industry, it was impossible for investors to believe that it would work.
I then went to the UK to meet with pharmaceutical companies to see if they’d be interested in using my technology. After many months, I secured just one single deal. I tried to fundraise in Ireland again, and was instantly more successful. I was now able to communicate the viability of my product to investors, and how, with their help, the business had the potential to grow exponentially. If I could close one deal with almost no money, then what could I do if I had their money and a sales force? Getting just one deal over the line made the company viable but, more importantly, made the company worth something financially.
The good news is that you don’t have to have secured six-figure deals to prove to investors that your business has what it takes. In truth, a little can go a very long way. A rebel entrepreneur who has developed an app that has been downloaded a couple thousand times will emphasise its possibility at fundraising meetings. A company owner who has sealed one or two deals will ensure that their potential investors are made aware of this. This shows them that the product or business model actually works and can make the company worth ten times as much. By demonstrating that you have had small successes in spite of a lack of funding, you prove that your product or service is viable. This will get investors excited.
If a rebel entrepreneur can demonstrate that they can go a reasonable distance for nothing, you invite investors to imagine your business’ potential to grow with additional funding.