To be an entrepreneur today, Alexis Ohanian said all you really need is a “laptop and an Internet connection.” And the Reddit co-founder should know, considering he conceived and brought to life a top 100 site, launched Breadpig and hipmunk, and now invests in more than 50 tech startups.
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And good companies that are worthy of investor attention typically emerge before the venture capital community catches on, Ohanian said. In other words, the investors may give you power, but you should get started without them.
“Companies are emerging before investors get wind of them,” Ohanian said. “So when they do, the companies already have growth and traction, so the founders have a lot more leverage.”
Lawrence Lenihan, managing director of First Mark Capital, agreed and said some of the most promising companies today aren’t actively seeking out investors. The landscape is changing.
“We have been around for 16 years, so companies are always looking for us,” Lenihan said. “But the truth is that some of the best companies aren’t looking for money. So we want to find them first, and be the first ones to invest in these great entrepreneurs.”
And if your company does grab the attention of potential investors--here are some tips from Ohanian and Lenihan on making your pitch a success:
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No. 1: Get to the point. It’s not called an “elevator pitch” for nothing. Ohanian said to get your core message across as soon as possible when pitching to potential investors.
“It’s something I still struggle with because I love to talk,” Ohanian said. “But you only have a little bit of attention to capture, and have to do it in a compelling way. There is something really important about being able to get the core message of your company across in a short period of time.”
No. 2: Think BIG. Lehinan said one of the biggest mistakes companies are making today is thinking too small. That won’t get this VC veteran’s attention.
“One of the biggest things we want to see right now are companies that are solving big problems and doing big things that are going to change the world,” . Lehinan said. “Companies doing something really gigantic to impact these industries and change them forever.”
No. 3: Break out the numbers—early! Ohanian said so many businesses fail to detail their growth or profits until the very end of their pitch.
“They hide it or save it for the last thing, when the first thing I need to know is, is this business that gets my attention? Ideally with traffic or revenue,” Ohanian said.
No. 4: Make sure you are a full-fledged idea. Another notion of thinking too small is pitching what is really just a product or feature as a company for investment, Lenihan said.
“They focus on small areas. We hear about devolution of markets where its companies that aren’t really companies, they’re really products. Now we have products that aren’t even products, they’re features, we may even be at the stage where its buttons on features,” he said. “So [pitching] small issues, small ideas, small businesses [is a definite no-no].”