You’ve got a great idea, a business plan and maybe some seed or grant money, and you’re reared up and ready to grow. But are you?
Panelists this morning at the Great Lakes Venture Fair in Cleveland doled out some tips for budding entrepreneurs getting ready to do their first round of fundraising. On the panel were Jon Snyder, president and CEO of Cleveland neurostimulation company Neuros Medical; Kevin Mendelsohn, vice president of finance and corporate development for CardioInsight Technologies; Art Fritts, president and CEO of nanotechnology company NanoSperse; and Lisa Novelli, president and CEO of National Composite Center. Here’s a quick rundown of what they suggested entrepreneurs think about before they raise any money:
Can you verbalize specifics on the market gap your product or service fills? Just as important as explaining the technology itself is the ability to quantify the unmet need you’re serving. “Why is that unmet need so dire, and why are people going to be willing to pay for it?” Mendelsohn asked.
Do you know how much money you need? Snyder recommended not moving too fast and going out to look for a complete round right off the bat. Think of how much money you need to reach your next milestone, and never take money out of desperation, Novelli warned. “Don’t get overly excited; focus on exactly what you need to have.”
Do you have a long-term funding plan? “Understand the full financing needs of the company over time,” Mendelsohn suggested. “That may lead you toward different kinds of investors.” It also demonstrates that you have a true understanding and vision for where you want the business as a whole to go.
On that note, are you meeting with the right kinds of investors? Your market, geographic location and the amount of money you want to raise could all play into which investors will be most interested.
Are you mentally prepared to be told no? Persistence is key, especially in your mission to validate your concept and business model as high in the value chain as you possibly can. “You really have to be convinced that you would put your own money into it,” Fritts said.
[Photo from Free Digital Photo user twobee]