When Prospective Investors are Looking for Predictability

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When Prospective Investors are Looking for Predictability

 

If you’re fundraising during the very early formation of your company, your ability to predict the future will be very difficult.  Of course, you can imagine and dream what might happen.  But many agree that it’s a waste of time to project your financials 3+ years into the future.  I’ve already written that not spending the time to create a traditional business plan doesn’t mean you shouldn’t plan (see related post titled ‘Don’t Waste Time on a Business Plan’ Doesn’t Mean Don’t Plan).  But what do you do when faced with an investor prospect that is specifically looking for predictability?  You can either drop them from your list (at times the right thing to do) or you can share the following things with them in hopes they will serve as a substitute.

  • Market size and projections

    Let others do the projections for you.  In this case, share data from industry and financial analysts.  Then, specifically relate your company, solution, approach, vision to the data.

  • Validated learning

    Describe how you have already validated certain things that were previously assumptions that were critical to your success but now have been validated through various methods.  Then project forward the additional things you plan to validate and how you will go about doing it.  This shows your methods and approach.  The truth is that you’re regularly going to be thrown “curve balls” that you need to react to, so demonstrating your methods is far more valuable than trying to predict the future.

  • Customer centricity

    Hopefully you have been carefully listening to your prospects and customers.  If your philosophy and culture is highly customer-centric, describe this and give examples.

  • Past successes (other ventures)

    Have you previously set out on a course to accomplish ____ and achieved it?  It doesn’t exactly matter how you get there but tell the story in this manner:  “While at _____ we set out to _____ and we got there by A, B, C.”   Show that you’ve successfully executed on a vision and used validated learning and customer centricity to do it.

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