Three Things to Prepare Before Meeting Investors

What must entrepreneurs prepare to win investors over? Suppose you have a promising venture that is just getting started and have secured an investor meeting. What work should you do? The author identifies three key preparations. Do them well and you can achieve more with less effort. First, explain clearly what you intend to do. Many startups lack a clear profit model early on. Investors do not understand it, and neither do the founders. Usually everyone sees only a broad direction. Suppose a product attracts substantial traffic: how will it be monetized? Many founders have not thought that far. They assume monetization will be easy once traffic arrives and can be figured out later. Investors see it differently. Monetization is their chief concern. You might propose selling products. But which products? How will you select them, control quality, manage the supply chain, and make them distinctive? Does the cost of acquiring traffic make sense relative to transaction profit? These are the key questions. Founders cannot describe their vision solely in terms of passion. Consider the investor’s perspective: the money eventually needs to come back, and the investment firm will exit at a particular time. You may think these are later questions and that traffic comes first. That can work; nobody knows exactly what comes later, and investors do not always think through every detail either. In that case, focus your pitch on explaining the trend. This matters enormously because judging trends is a central investor concern. That emphasis comes from the nature of investing. Investors generally do not back yesterday’s opportunities, which no longer concern them. New opportunities arise on top of old ones. They do not back today’s opportunities either, because many others have already invested and competition is intense. Nor do they back tomorrow’s opportunities: foreseeable, attractive ventures draw large institutions, which have abundant capital and favor mature, later-stage products with lower risk. Such products usually have very high valuations, affordable only to large investors. VCs therefore prefer products for the day after tomorrow: something dimly visible and not yet clear, but in an area certain to have substantial room to grow. These are their favorite opportunities because success can deliver excess returns. Founders should clearly anticipate their industry’s trends, explain its past, present, and future, identify changes and opportunities, and describe how they recognized the opportunity and prepared for it. Think through those answers beforehand. Second, have a distinctive edge. In plain language, where is your competitive strength? Every investor wants to know what barriers you have built. If another founder has the same idea, raises the same funding, and recruits a better team, can you survive? What if a large company does the same thing? These are investors’ greatest concerns and founders’ toughest questions. Your edge may be advanced technology: a breakthrough you have mastered or a wholly new product whose technology competitors cannot surpass quickly. That is a barrier. Industry experience is another. If you are a doctor with decades of experience and deep knowledge of healthcare’s development, that experience can protect a medical startup in ways others cannot simply learn. Most commonly, the barrier is people: what advantages does the founding team possess? When the author founded one company, he described two advantages to investors. First, he had recruited a well-known CEO as a partner, someone with an outstanding record at major companies. Second, they had extensive data analysis and understood the market better than anyone else. The greatest core competitive strength comes from people. That is why “investing is investing in people” remains true. With the right people, even a second-rate idea can become a first-rate result. Accumulate advantages over time. Nobody cares what you are bad at; they care what you do best. A barrier is necessarily hard and costly to build. Like a high wall, it keeps rivals outside; anyone following the same path must first cross it. You can be as small as a hedgehog, but once curled up, you must leave opponents nowhere to bite. That is the importance of barriers. Third, how well does your team execute? Investors once focused on a team’s top leader, the person with the idea, believing good ideas mattered most. Many now look at the second-in-command—the person who turns ideas into action. A good deputy can often revive a bad idea. Sometimes the idea itself matters less: information is fairly transparent, and discovering a trend nobody else has noticed is almost impossible. Your remaining option is to run faster than others, without holding back. Even running the wrong way and promptly adjusting is better than not moving. Execution is therefore a core entrepreneurial advantage. How do you demonstrate it? Show what you have done: impressive past achievements, fleeting opportunities you seized, and competitors you left behind. These all come from accumulated experience. Entrepreneurship is not something to undertake on a whim; it is a long process. If you are naturally restless and always trying things, show that drive. Investors will give you credit for it. Whether in an investment proposal or a pitch, explain these three points clearly and gain recognition for them. What remains is the price. #得到聽書 #創業如何搞定風投 (Dedao audio summary; How Entrepreneurs Can Win Over VCs, descriptive title)