Every startup founder believes that if only they could attract VC investors, their business / brand would take off like a rocket and become a marketplace smash.
Unlike angels, private equity investors don’t invest in founder’s dreams. They only make seed round investment in a proven business that has the capability to scale. And most importantly, will make them lots o’ money over time. Just because you’ve had angels invest in your early growth brand, doesn’t mean your business is ready for private equity investors.
VC investors are only interested in those founders who have successfully done all the difficult work of the early struggle phase bringing new value to the marketplace.
The high bar for your brand to be investor ready:
1) Your early stage brand has marketplace acceptance…
Your innovation is proven, you have a solid base of early adopter customers/consumers who love your brand and they’re spreading the word. Your sales are on an upward trajectory approaching the 7 or 8 figure revenue level.
2) You have a solid leadership team in place…
Within your business you have the right people in the right seats all rowing the boat in the same direction toward creating a strong customer-focused culture. Your team has the knowledge, skill and leadership expertise to take the business to the next level.
3) You have solid business relationships with supply chain, manufacturing and distribution partners…
A brand ready to scale has an established reliable supply chain, manufacturing capability and upward velocities in retail sales channels. These essential relationships signal to investors that you can operate efficiently and profitably meet growing demand for your brand.
If you’re brand isn’t investor ready, here’s what you need to focus on to get it ready:
1) A compelling idea of value… Behind every great brand is a compelling idea capturing the customer’s attention changes their behavior and fulfills their unmet or unsatisfied desires. The world doesn’t need another me-too skin cream, snack bar, taco sauce, T-Shirt or fizzy water brand. Your innovation needs to be highly valued and in short supply. 2) A resolute core purpose and guiding values… Purpose and values is the foundation of why your brand exists and why it matters that distinguishes your brand from alternatives in your category. Yvon Chouinard, founder of Patagonia says, “We follow out beliefs customers follow us.” Influential “one and only” brands represent a set of shared beliefs with their customers/consumers/users.
3) A strategic vision that is a central organizing principle … This is the spiritual software employed as a management discipline that establishes the mission, organizes people, operations and money to serve customers around the shared values of your purpose/passion/cause.
The hallmark of an investor ready brand:
The “idea of value” is a proven innovation attracting an expanding tribe of people who love what the brand offers and pay a premium price to obtain it.
Purpose/passion/cause is the “true north” that attracts and retains a skilled leadership team with the capability to profitably manage growing demand.
A strategic vision establishes a clear mission for how the organization will build productive relationships with partners, suppliers and distributors essential for a bigger future.
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