I sure as hell never thought I’d be saying that I was headed out to LA to shoot the 11th season of Shark Tank. But here we are and I’m so humbled by the amazing response that the show continues to get.
So, in honor of next week’s filming, I thought I’d answer the #1 question that I am asked all the time:
“What do you look for in a potential investment?”
But, if we are being honest, the real question should be what do I look for in a SOLID investment?
Well, let’s start here…
Before approaching investors, you need to know:
- How is yours the better mousetrap?
- Who are your competitors?
- Do you have sales?
- If it is the only one of its kind, do you have patents, trademarks?
Even though I’ve invested in over 100 companies, I like to tell people that the best form of investment in your company is through sales.
The more you divide your company, the smaller the pieces of the pie are.
As a result, you will have less control.
If you really do need a cash infusion, here are the top 4 things I look for when I am investing.
1. People First
The relationship between an entrepreneur and an investor is extremely important.
I want to work with founders who know their business, have a plan and a vision, are resilient masters of their industry and are infectious leaders.
We are going to be spending a lot of time together; we have to like each other.
Is the business scalable? What potential do you have to grow? And is that growth cost effective?
Your idea should be based on market research, not just your buddies’ opinion.
3. Proof of Concept
Don’t talk to me about hypotheticals and what could happen.
Have you made sales? And do you know what they mean?
Do you understand your market? If you tell me everyone is your customer or you can’t prove that people want to buy your product, count me out.
4. Know Your Business
My investment isn’t tuition for you to learn business basics. It’s so we can scale. That’s not to say that you shouldn’t expect guidance from an investor.
But I’ve made my fair share of mistakes. Learn from the people who came before you. Take online courses, read books, listen to podcasts. Do whatever you have to do to take in every ounce of knowledge you can get.
What questions do you have? Drop me a line at firstname.lastname@example.org.