Category: Business

What do investors want?

1. Clarity regarding how funds are used: In some cases an entrepreneur has too many projects/ideas (which can be both good and bad) but the company needs to initially be a lot more laser focused. It’s good because it shows the entrepreneur may be willing to “pivot” or adapt to the best potential opportunity. However, it can be bad if it’s distracting and causes the company to lose money.
2. The path to revenue/profitability needs to be more persuasive
3. The growth/sales strategy needs to be more persuasive
4. Milestone based funding to reduce the investor’s risk
5. Committed entrepreneurs: For example, full time and some cases they have skin in the game.
6. The upside is explained clearly. For example, creating: a) High growth company (eg. user acquisition b) Creating a cash flowing company c) Creating valuable intellectual property that can be licensed
7. Regulatory/compliance risks
8. Barriers to entry
9. Risk controls (this is a big category). For example:
   1. Budget/cash flow decisions are controlled
   2. Manager/operator do business in a jurisdiction with a good legal system in case something goes wrong
10. The team’s interests are aligned. You want to ensure that the company can focus on building great things instead of worrying about whether they believe they are fairly treated
11. Strong management team that works well together
12. Great product(s) and/or services
13. Proof that they can get the job done and problem solve
14. Proof that they can overcome pressure (eg. some investors prefer entrepreneurs that have had setbacks) so that they know that they are dealing with a resilient entrepreneur
15. Selective and skilled at setting priorities

I think one of the most valuable courses that aspiring students should take, that is not widely available, is risk management.

Risk management should cover the following:

• Managing insurance
• Managing legal/compliance
• Evaluating statistical probability/mathematical modelling
• Understanding
• Manage people and culture
• International relationships/cross border relationships
• Managing technological risk

A great example of a fantastic risk manager is Travis Kalanick from Uber. In 1998, Travis dropped out of UCLA with some of his classmates to found Scour, a search engine for downloading potentially unlawful (copyright protected) content. He learned to navigate the risks of this business and applied this knowledge to successfully navigate taxi red tape/monopolies/regulatory hurdles in multiple countries.

Another great example is Chris Sacca who has one of the most impressive track records as a venture capitalist. He has a great understanding of managing risk. He claims he had a negative net worth of $4 million and worked off his debt, eventually becoming a billionaire.