Dan Schawbel’s Sharktank Roundtable interview series provides great tips for entrepreneurs and businessmen from the eight hosts of the hit show. From that latest and last interview, here are 3 helpful tips to find investors according to Mark Cuban, a serial entrepreneur and a “Shark” in ABC’s popular show. Starting entrepreneurship early in his life, Cuban’s first venture was Broadcast.com which he eventually sold to Yahoo. His other businesses include: HDNet, 2929 Entertainment, IceRocket, ownership of the NBA's Dallas Mavericks, and a slew of other investments.
"Do everything you can to not have to seek outside money. Most companies don’t need more money, they need more brains."
Asking other people for seed capital doesn't just mean that they will provide initial funding for your business that you will have to pay for in the future, they will also require other collaterals such a certain percentage of stocks, a position in the board of directors, or some other executive position. Before scouring the Silicon Valley for angel investors and venture capitalists to fund your business, try to fund your business by yourself first. This way, if the venture doesn't turn out to be as profitable as you initially perceived or your target business leads didn't see it as valuable enough to purchase, then you can stop the operations anytime without needing to worry about paying back any money you owe from someone else. Afterwards, you can easily start again with another idea that may bring in more business leads.
"If you do need money, know exactly how much you need, what you are going to do with it and how it will get you to profitability."
If you really need outside financing, then you have to prepare a complete report of where you will be spending the seed capital that your investor will lend you. No one would lend you anything if you don't have any clear plans on where to spend them and how you will get the money back. Your report should include: how much you plan to spend on product R&D, your projected expenses for lead generation campaigns and marketing, the distribution expenses, employee salaries and office rent. There might be other things you need to consider as well, such as if you need to outsource certain operations to a BPO company or a call center. The point is that you have to make it as complete and accurate as possible so that you won't run out of money prematurely or borrow much more than you can afford to repay.
"Be ready to work your ass off. Raising money is not a destination, it’s a starting point. The minute you take money, you no longer are your own boss. You work for the people giving you money. Be prepared to work harder than you did before. Raising money doesn’t make things easier; it creates more pressure for success."
Having an investor on board can be both a blessing and a burden. On one hand you can take more risks because you have someone backing your efforts, on the other, you have to choose the risks you take wisely because the same person backing you up is expecting a lot from you. You will have to work extra hard to make sure that you always have a steady flow of sales leads coming in.
There is little margin for error and failure when investors are involved so you have to think very carefully before you find one for your business.
