Inside Scoop from Investors
Students from the Singapore Management University (SMU) Masters of Science in Innovation program joined our Summer Venture Program entrepreneurs for an investor panel held at Babson Boston. Five investors, Natalie Bartlett of Rough Draft Ventures, Parul Singh of Founder Collective, Sanjay Manandhar of Boston Harbor Angels, Shereen Shermak, Superangel, and TJ Mahony of Accomplice, gave some insight into the world of investing. Our diverse investor panel covered a wide range of topics from investing in student entrepreneurs to dealing with failure. Their expertise varied, which provided for a more well-rounded discussion.
The talk begun with a simple question: what do investors look for in student entrepreneurs?
Being that most of the panel’s audience consisted of students, we thought this question would be a great way to kick off the talk. Natalie Bartlett commented on how universities are one of the most unique places to start a company. “No other time in your life are you surrounded by so many brilliant people, an ample amount of time, and so many resources at your disposal.” Rough Draft Ventures specifically looks for student entrepreneurs who take advantage of the fact that they are students to further propel their business.
Parul Singh noted that the founder of a business is the x-factor. “You can have a decent idea, but an amazing team and be incredibly successful.” Parul shared that many investors are looking for entrepreneurs that are the full package, are able to show that they can execute their ideas, and are constantly thinking of potential problems in their business and finding ways to address them practically.
Shereen Shermak advised our entrepreneurs to check their university’s policies regarding rights to intellectual property. “As an investor, I want to know what I am investing in. So make sure you have those kinks sorted out.”
Which is more valuable—dumb or smart money?
TJ Mahony exclaimed, “Capital is hard to come by…Worry about the smart checks once you have more traction.” Sanjay Manandhar added and said that customer funding your venture is a great way to attain money. “There are these stakeholders in your businesses called customers, believe it or not, they have money.” Sanjay says to use this to your full advantage. Most importantly, take whatever you can and get moving. Your business is only as powerful as you make it.
Investors have to say no a lot, it is a part of the job. How should our entrepreneurs view “no’s?”
The way an investor reacts to your pitch is completely subjective. Parul explained how past mistakes that other startups have made, can indicate what companies an investor might go forward with in the future. So getting a “no” could have nothing to do with you.
Even worse that receiving a “no,” is having someone say “let’s have another coffee in three weeks.” Shereen exclaims that if you’ve had three coffees with someone and they have yet to invest, they probably won’t. When you first meet with an investor, ask them when they wrote their last check. If it’s been more than 12 months, it is highly unlikely they will invest in your company. Time is precious. Do a bit of qualifying before you take a meeting, and don’t wait your time on those that won’t be beneficial to you.
“I am prepared to say no,” TJ explained. “The worst part about being an investor is that 99% of the time, we have to say no.” The best thing you can do as an entrepreneur is to disarm your investor. In your first meeting with them, come in and say that you aren’t looking for an investment, but rather just a piece of advice. Show an investor your traction, explain your business, and impress them. This will leave them wanting to know more and check back in with you, ultimately leading to a future “yes.”
What is the best way to get a first meeting?
Most of our investors agreed that cold LinkedIn messaging is not the way you should be reaching out to an investor, but rather utilize your network and find a connection. Some investors only take meetings with people who were referred by someone they trust; others will briefly skim their emails and take maybe one meeting. Your goal as an entrepreneur is to rise through the ranks of all the other startups to get that meeting. If someone in your immediate network cannot connect you to the investor you want, reach out to a portfolio founder. Ultimately, find a way to differentiate yourself from the hundreds of cold emails an investor gets in one day.
How do you approach failure?
In America, failure is seen as a prerequisite. Investors want to see how you learn from your failures. More importantly, were you were honest about these failures with past investors, or did you try to cover it up? Failure is inevitable, so how you handle it is key. To decrease your chance of failing, make sure that you are reaching out to the appropriate investor for your type of business. Do your research to avoid unnecessary failure. At the end of day, learning from and reflecting on your failures only makes you better equipped for your next venture.
Personally, this panel was one of my favorite activities of the summer as it really gave an inside look to what investors are like. After the 45-minute panel, the investors partnered with a couple startups each to hear their investor pitch and give feedback to our entrepreneurs. Once the panel was over, the SMU students had a chance to network with our startups and learn more about their businesses. Thank you to our speakers and visitors for joining us!