"Growth" is that buzz-word that has never really left the back of my mind as an entrepreneur. But I’ve always found that the term doesn’t accurately speak to businesses. The message is too complacent, especially in the fast-moving tech industry. Too inactive.
Real growth in business isn’t something that sprouts out of the ground and bears fruit—it requires effort. It does need to feel natural, however, and searching for an investor to kickstart this progression isn’t any different.
It needs to be the right fit for both sides of the equation. As the BroadbandTV team examined our recent investment from RTL Group in June, we have found them to be an ideal fit as they encouraged our continued growth and innovation. As a reflective entrepreneur, I find myself asking the question: what makes a good fit, and what are some general lessons that can be helpful to entrepreneurs looking for investors?
It’s not an easy question to answer at first glance, but it’s definitely worth examination. I’ve narrowed down four key elements that I believe are essential to help find a compelling investor match:
This seems like a no-brainer, but there really is a big distinction between the two. Like a good handshake, it’s not just a couple of organizations coming together, it’s an agreement of mutual benefit.
You have both put a lot of thought and scrutiny into your strategies, and neither of you are looking to make major sacrifices. So why should you? Truly complementary strategies reinforce each other without either side having to drastically adapt.
Ultimately, this comes down to research on both sides. What kinds of investments are they making? Where are they taking their business? What kind of specific expertise can they provide in your industry? How would they enrich your meetings with new and valuable perspectives? What is their presence in the media?
Find out how your strategy complements that of your investor, and make sure to discover and reinforce the elements of their approach that benefit you. The more you benefit, the more sound their investment. A good investor will do similar research, and should a handshake ultimately happen, both sides will be better for it.
DETERMINE YOUR SCOPE
Canada is famously known for its strong variety of viable angel investors, and it was a great place to start as we did our research. Despite being a proud Canadian business ourselves however, the right investment fit for us ended up being overseas. Our lesson here was twofold:
1. As a global business ourselves, we would benefit materially by having a global investor with its own substantial network of distribution.
2. The right fit isn’t always local and the right fit isn't always a pure investor that is just looking for ROI alone.
Make sure that the scope of your investor is true to the scope of your business. If you’re looking to grow locally, definitely look for a local investor that fits your needs and shares a knowledge of your regional demographic. This also helps for a more natural union, and helps ensure that everything else lines up more seamlessly.
Looking to grow globally? Expand your scale and look for an investor that’s in the right position to help you effectively. They may be right here at home after all, but that doesn’t mean you shouldn’t look next door or down the block before you make a decision.
THE HYPOTHETICAL ELEVATOR CLICHE
We’ve all painstakingly tweaked and re-tweaked our "elevator pitches" in one way or another. If you were in an elevator with your potential investor, think about your 30 second pitch. Does it communicate enough of your vision and market opportunity to set up the ensuing conversations?
The initial pitch sets the tone and serves to attract interest and pull investors into a conversation where key issues are investigated. Do your visions align? Do your mission statements conflict? This is about more than complementary strategies, this is about fundamental outlooks, beliefs, and desired outcomes. The bare bones of "them" and "you."
You should be comfortable talking business with your investor. Uncover their perspective. Get a sense their corporate vision. You can even sift through some of their advertising materials for their outlooks, and figure out how they fit within your own business ethic. If everything matches up at a fundamental level, beyond complementary strategy and appropriate scope, you’re now eye-to-eye with a potential investor.
IF THE CULTURE FITS, WEAR IT
Companies are often spotlighted by their business cultures, and an investee needs to fit nicely with the culture of its investor. Why? Again, it comes down to the fundamentals of doing business. You and your investor need to connect and interact in a way that is natural, positive and efficient—just like an ideal client relationship. If any of these parts are missing, you are both swimming upstream and not getting the full benefit out of the partnership.
We define our businesses in two ways: in part by goals, vision, scope and strategies; but the rest of it is ultimately defined by our people. If people don’t align, a positive business relationship will never get off the ground.