Most would declare that streaming countless hours of CBC’s Dragon’s Den or its American cousin Shark Tank as an utter waste of time. To the contrary, I would call it research. While show’s such as Dragon’s Den or Shark Tank will not make you an expert in early-round financing, they do provide many of the preliminary questions and concerns that any educated investor will expect you, the entrepreneur, to answer and establish.
Here are just some of the lessons gleamed from my constant stream of Sharks and Dragons that may help you before seeking any early-round financing…
Educated investors want to know that there is a market for the product or service, that demand strong and that it will continue to grow. Nothing will scare away an educated investor faster than a big dreaming entrepreneur with no sales to show for all of their hard work.
2. Know Your Numbers
Not sure what your profit margin is? Your gross and net income? What’s your financial projections next year? How about five years out?
The fact is, that you or someone from your team will need to have a strong grasp on the books to be taken seriously. At the end of the day an educated investor only cares about gaining a return on their investment. If the investor see’s that you don’t take great care in dealing with your money, there is no way that you’ll ever get any of theirs.
3. Know Your Industry
Before ever stepping foot inside an investors office you should have a deep understanding and grasp of the industry that you’re competing in. Who are the major players? What makes you unique? Or, as Mr. Wonderful would say, “what’s stopping those guys from crushing you like a bug?”
While we aren’t Sharks or Dragons, we at the Business Venture Clinic we can provide you with the information needed to ensure that you’re on the right path before making any early financings. Please contact us today, we look forward to hearing from you!
James Hamilton is a 3rd year law student at the BLG Business Venture Clinic.
Blog posts are by students at the Business Venture Clinic. Student bios appear under each post.