JumpStart: IdeaExchange Blog

The challenges of raising investment capital for your business and how to best prepare for an investor have been well documented by many industry experts. Yet having witnessed scores of presentations over the years I find that many entrepreneurs routinely miss a few key areas. And while there are certainly no guarantees or full-proof plans that will automatically result in successfully raising capital, the following suggestions should help you along the journey:

1. Present your business with energy, enthusiasm and confidence –- if you’re not excited about your business endeavor you’ll have a very difficult time getting an investor excited.
2. Know your business and industry cold – take the time to really understand and segment your chosen market. Know the trends, and consider doing a SWOT analysis on your chosen market (Strengths, Weaknesses, Opportunities and Threats).
3. Know your competition cold –- don’t make the mistake that so many have in assuming that “No one else is doing this”. If your investor discovers a recognized competitor that you should have discovered, you have instantly damaged your credibility.
4. Consider a comparison chart that demonstrates your unique advantages versus key competitors.
5. Clearly articulate your Value Proposition and what “makes your business so special’, and further explain how your unique competitive advantage represents both a significant barrier for your competition as well as a real benefit to your client.
6. Do your homework on the overall size of your market both domestically and internationally. That includes both consumer and commercial applications if applicable (overall market size or potential should approach $1 billion or better to really get the attention of investors).
7. Explain why you or a designated team member are the best candidate to serve as CEO.
8. Secure or “tee up” a deeply experienced management team. The people you surround yourself with are often the key deciding factor in securing investment capital.
9. Present a clear and “executable” plan to exceed $30 million in annual sales potential within 5 to 7 years. Remember that investors have options; they can choose to invest in any number of opportunities from traditional stocks and bonds to other high growth businesses. If you’re going to convince an investor to support your vision, you have to paint a large enough and clear enough picture that makes choosing your plan worth the risk.
10. Make sure the “assumptions” that drive and support your financial projections have been reviewed by experienced personnel so that such key items as unit sale prices and costs per unit have been thoroughly vetted.

As stated previously, in the journey of raising capital there are no magic bullets or guarantees. By incorporating these 10 tips however, you’ll be well on your way to dramatically improving your chances for success!

Darrin is Chief Economic Inclusion Officer of JumpStart and President of JumpStart Inclusion Advisors. He founded and ran his own strategic planning and management assistance firm and spent 16 years in the commercial banking and finance industry. Darrin has an MBA from Baldwin Wallace College and an undergraduate degree from Mount Union College. He has led a series of workshops and seminars on matters of economic development and diversity.

Early-stage entrepreneurs need to pull inspiration from all kinds of places; how about the movies? Here’s a list of movies that are perfect for just the right time or right situation you might face with your high growth startup. 

Instead of a coffee…: Having trouble getting charged up for that very important first customer meeting, or need to inspire the team when you’ve had a tough week? War movies show the purest form of competition and Gladiator has the best opening of any. “Unleash(ing) hell” on the competition is a good thing! (Honorable Mention:  Jerry Maguire. How often do you think “help me, help you”?)

Feeling down? Whatever unexpected challenges the market has thrown at you this week, you are still in better shape than the guys in Apollo 13. Watch it for the inspiring examples of the principles you face every day:  1) the best laid plans don’t always work, so be ready to adapt quickly, 2) it’s amazing what you can do with just a few resources, and3) there’s a lot to learn, even positive outcomes, from “failure”. (Honorable mention:  Rudy, for the principle that “hard word really matters”.)

Reminder: Execution is everything. The 2000 movie Memento starring Guy Pearce was a mind-blower. The story is interesting, but it’s the delivery (read: execution) that brings the movie to life. Any other execution and the movie still would have been very entertaining, but the way it was told revolutionized the experience, brought a totally new kind of innovation to storytelling, and changed the way I think about movies to this day. (Honorable mentions for similar executional surprises:  Pulp Fiction and Crash.)

Worth more than I paid. We all want to get the pricing that will allow us to generate healthy profits, but to do so you need to deliver value beyond what you’d expect for the money. Avatar (the 3D version) wins. I paid $38 for my entire family to see this and wow, 3 hours of pure entertainment later, I would have paid double. (Honorable mention:  The recent Percy Jackson and the Olympians movie, for being infinitely better than most kids’ movies. Last summer’s The Hangover was worth gold.)

It’s very cool to be an entrepreneur. There are so many movies that can summarize why entrepreneurship is worth the trip, but my absolute favorite is Risky Business. It’s the ending I especially love. The students who are members of Young Enterprises Club present the summaries, and outcomes, of their businesses. Most of the students sell somewhat familiar things (like new paper towel holders) and earn a profit, albeit small. Joel deals in a riskier world, and he grosses a lot more money than his fellow students. Risky business he was in, and he wasn’t sure how it would work out, but he took the gamble and got the big payoff. Products aside (obviously, as our clients’ products are legal), JumpStart clients are in this same world — risky, scary businesses that could lead to big payoff, but only after taking big risk. Brilliantly fun. (Honorable mention:  None - It’s in a category all its own)

What movies would you add to the list?

Cathy Belk is the Chief Marketing Officer of JumpStart. She specializes in branding, marketing communications, and business management. She brings 16+ years of experience in a variety of marketing and business roles, but gets her energy from working daily with entrepreneurs and their growing companies.

Recently, Malcolm Gladwell wrote an article called “The Sure Thing” in The New Yorker which shares the “entrepreneurial stories” of individuals such as media mogul Ted Turner and hedge-fund manager John Paulson.

I found this article fascinating because it speaks to something that I believe most entrepreneurs do not truly understand. And that is in order to realize very significant success in pursuing an entrepreneurial venture, the best entrepreneurs have a deep understanding as to why their products or services are going to be successful against the competition — and in many cases they understand this before they have even created the product.

Most entrepreneurs fall in love with their products or services. This article speaks to how both Turner and Paulson became experts regarding the industries their companies were operated in and how some of the “fundamental truths” in these industries were 100% wrong. These entrepreneurs, with deep insight and understanding, did the unthinkable by thoroughly understanding a few fundamental truths regarding their industries that others did not see or ignored.

Gladwell’s article is based on a new book called “From Predators to Icons,” written by French scholars Michel Villette and Chatherine Vuillermot who set out in the book to uncover what successful entrepreneurs have in common. This book shares that truly successful business leaders are anything but a risk-takers. But rather predators who seek to incur the least risk possible while hunting.

Every startup entrepreneur should read this article to help them to pause and consider some of the fundamental truths they are operating under as they pursue their entrepreneurial dreams. In most cases, there is likely going to be some additional homework they should do to increase their likelihood for sucess and reduce the risk of their new venture.

Ray Leach is CEO of JumpStart and brings his energy and leadership experiences from founding five high growth entrepreneurial and intrapreneurial endeavors in the last 20 years. Ray is a Sloan Fellow and earned an MBA from the MIT Sloan School of Management. He also earned a BA in Finance from the University of Akron.

Ever since the recession of the early 2000s, Northeast Ohio’s economy has struggled to maintain our competitiveness vis-a-vis other communities and regions in the U.S. This has been well documented of late. We have also suffered problems here in Northeast Ohio well before other areas of the country. Our challenges around foreclosures a few years ago are now the challenges for much of the entire nation.

If you think about the big picture, you can see that Northeast Ohio is much like a “canary in a coal mine.” Our economy has been challenged by critical, significant issues such as globalization (via our loss of manufacturing jobs), increasing requirements of a broad and well-educated workforce, and the financial requirement (not just desire) for more competitive and streamlined government.

Could everyone else’s new found challenges (and the time it is going to take local communities to address some of these) give Northeast Ohio the opportunity to make tremendous progress in the next five years? I think the answer may be yes.

A serial entrepreneur who had left Northeast Ohio in 2003 to lead a company recently returned and commented to me that “the entrepreneurial landscape in the region has completely changed in just five years.” I think this is a great example of what this region can do.

In order for this to happen at a broader level it is going to require an enhanced level of leadership and a focused agenda. I think it can be said that all of Northeast Ohio’s efforts around regionalism, especially when aligned with the State’s Third Frontier and the Ohio Department of Development’s new strategic plan, could continue to play an even more significant role in help this region to catch up!

Ray Leach is CEO of JumpStart and brings his energy and leadership experiences from founding five high-growth entrepreneurial and intrapreneurial endeavors in the last 20 years. Ray is a Sloan Fellow and earned an MBA from the MIT Sloan School of Management. He also earned a BA in Finance from the University of Akron.