One of the most commonly overlooked aspects of PR is the potential impact it can have on attracting investment opportunities. For today's post, I've turned to someone immensely well-versed in these areas... author, angel investor and entrepreneur Marty Zwilling. I was so thrilled he took the time to help me out with this post! Below, he answers some of your questions about the process behind angel investing, how PR can help start-ups and positioning your business plan for success. Enjoy!
As an investor, what 2-3 things do you look for that separate the promising start-ups from the ones you view as less likely to succeed?
I’m a strong believer that the people make a business, rather than the idea. Thus I look first at the executive team, for prior experience starting a business and prior domain experience. Second, I look for traction – is the product built, do they have customers and revenue, have they met any other milestones? Third, I look for some intellectual property (patent, trademark) that provides a competitive edge or barrier to entry. There are many entrepreneurs with big ideas who can’t execute well.
Does press coverage help start-ups who are seeking funding? Is that exposure and credibility something that investors care about?
Yes, press coverage is very valuable, in the sense that it means the entrepreneur was able to make it happen. Getting the right press coverage is a marketing and promotion challenge, and good marketing is required in every case today, so investors are impressed with people who can produce it. The old adage of, “if we build it, they will come” is dead. Some people argue that even bad press is better than no press coverage. At the same time, most investors will claim to believe nothing they read in press releases or promotions.
Since investors want to feel confident in the marketplace viability of a company they're considering investing in, how do things like customer testimonials and case studies help give some proof of viability?
Customer testimonials and real customer case studies are very powerful viability and credibility statements. We all know that most customers won’t bother with a testimonial unless they are very impressed, or totally satisfied with value received. These are many times more valuable than a startup’s own assessment of its solution's value. By definition, it means you have real customers (not just an idea or a plan).
You've seen thousands of business plans. What is one of the top mistakes start-ups make in this area when looking for funding?
I have seen many, many business plans, including too many that look like product plans or marketing plans that would convince customers to buy the product. Entrepreneurs need to realize that investors are not buying the solution; they are buying a chunk of the business. Thus the business plan has to convince me that this is a good business – the opportunity is large and growing, the problem is painful for real customers who have money to spend, the price exceeds the total cost by a large margin, competitors can be held at bay by pricing or intellectual property and you have an exit strategy so I can get my money out. If even one of these things is missing or addressed poorly in a business plan, it probably won’t get funded.
Marty Zwilling is the founder and CEO of Startup Professionals, a company that provides products and services to start-up founders and small business owners. He writes a daily blog for entrepreneurs, and dispenses advice on the subject of start-ups to a large online audience of 785,000 Twitter followers. He is also a regular contributor to Forbes, Entrepreneur Inc., and the Huffington Post. He has published three books: Do YOU Have What It Takes To Be An Entrepreneur?, Attracting an Angel and StartupPro: How to set up and grow a tech business. He is also an accredited angel investor with Arizona Technology Investors (ATI).