What Investors Want - What They Really Really Want
I have seen many investment pitches from entrepreneurs during my time at SETsquared and I am still amazed that they miss what investors really want to hear - how they are going to make money! Most entrepreneurs at best gloss over the financials and some just by pass it completely. Yes they want to know, briefly, what the product is and yes they want to have confidence that you have a competent team around you but the numbers are what will spike their interest. After all investors are not charities. They invest to make money and you need to tell them how and when you are going to do that, what you are going to spend their investment on to realise the profit they yearn for.
Shows like BBC3 Be Your Own Boss don't help. Richard Reed, of Innocent Smoothies fame, focuses the businesses on getting customer traction which is important to give credibility to an investment but when it comes to him investing big, we don't see him pouring over spreadsheets or quizzing the companies hard on their sales forecasts. I am sure this happens in the background but lets face it numbers aren't sexy and don't make exciting TV.
I understand why entrepreneurs shy away from the figures. They are often inventors, geeks or ideas people not accountants but if you want to run your own business and get investment you need to understand the numbers too. No CEO of a company doesn't understand profit and loss, sales margins, production costs vs product price. Don't make the mistake that many make and think an investor is going to bring the financial expertise to the party. You have to have a handle on this yourself. In the same way as an entrepreneur needs to show their product is credible, they need to show their predicted sales are too. That they can translate the idea into sales and achieve the volumes they need to return the health profit on investment. That is what Investors want.