Of Mice and Men Who Want to Become Entrepreneurs

For many entrepreneurs, locking down an angel investor or two for their startup business is a necessity.  Considering the current state of the economy and the lack of jobs growth over the past 8 years, plenty of aspiring business owners do not have the option to obtain funding from a bank or family and friends.  Because of this, it is important to have a fluid and flexible business plan.  The overall structure and primary focus of what an angel investor is looking for may vary from person to person, and an entrepreneur does not want to pitch a movie idea to an investor with a business plan heavily focused on the film’s financials when the investor they are selling to is more interested in the content and the target market.  This is why research is vitally important.  We aren’t talking about research for your business plan.  Of course, that is imperative to not look like the idea was drawn up with crayon the night before the investor pitch.  The research we are looking at here is the research of the investor.  Preparing thoroughly prior to the pitch with background information, previous investments, and more general details about investment habits could help lock down the money needed to fund the startup he or she dreams of.  Let’s take a look at a couple of more popular investors.

Mark Cuban is a tech entrepreneur most famously known for being the outspoken owner of the Dallas Mavericks and repeated investor on ABC’s Shark Tank.  Additionally, he is the founder of Broadcast.com, HDNet, Landmark Theatres, and Magnolia Pictures, among others.  Born in Pittsburgh, Cuban caught the entrepreneurial bug while attending Indiana University-Bloomington’s Kelley School of Business.  In the past 2 years, Cuban has invested in over 10 businesses, including Upstart, Flingo, Kisstixx, and more.  Of these startups, he has invested anywhere between $250k to over $10 million.

Cuban is a huge fan of investing in tech companies, particularly ones that are content driven.  He has a keen focus on the fact that consumers will always be willing to pay for high-end content as long as they appreciate the product.  When focusing on investment opportunities, Cuban looks at a couple of different things.  In his words, Cuban invests in “volatility”.  He understands and appreciates the fact that the markets fluctuate regularly, and because of that he looks for businesses that are structured to be adaptable to the market and what consumers are looking for.  Because of this, he considers it a non-negotiable piece of a business plan.  A second thing that Cuban looks for in terms of investing is the person he’s investing in.  He tends to look for intelligent people with distinguished concepts and a drive for execution, with the execution piece being the most important part of the plan.  The reason being is that many startup business owners don’t focus enough on the implementation of their concept and instead simply attempt to sell the concept itself and how amazing they believe it could be.  The smart investors that Cuban is attracted to put just as much, if not more time into the overall strategy than they do of the product or service they are providing consumers.

Another amazing angel investor is Ron Conway, considered by many to be the “dean of angel investing in Silicon Valley”.  A former salesman, Conway owns the venture capital firm SV Angel based out of, you guessed it, Silicon Valley in San Francisco.  Conway started investing independently in 2005, and by 2006 he had already appeared on Forbes Magazine’s Midas list of top dealmakers.  Conway is known throughout the investment world for his crowdfunding strategies, in which he would hold cocktail parties and invite large amounts of celebrities with whom he obtains funding to invest in various startups.  One thing is for certain…the man knows how to network.  Conway has invested in over 500 startups, including Google, Facebook, Foursquare, PayPal, Napster (whoops!), Twitter, and more.  Additionally, Conway is known for truly being the backbone for the entrepreneurs he invests with.  It often times upsets other investors, as some believe his comments are unprofessional and unnecessary.  Either way, as an entrepreneur, Conway is the man you want to have on your side.

The primary thing that Conway and his group at SV Angel look for in a business plan is Internet presence.  Without it, Conway is not likely to invest.  The reason being, outside of the fact that the company is based in Silicon Valley, is that they are low cost alternatives to physical businesses and can reach a much, much larger market with much, much smaller legwork.  Think about it.  The availability of the web has made it tremendously easier to reach a much broader audience.  Why not use it to its fullest advantages?  Secondly is an important piece to the business plan that may not even hold a single page in the actual plan itself.  That important piece is referrals.  Many entrepreneurs don’t think about it, but networking can play such a huge role in the opportunity to find an investor.  Networking is such a key piece to the puzzle because it shows that the opportunity is there.  Many investors will only invest based on referrals, and Conway seems to be one of those angels.  Even if those networked connections don’t have the funding or simply don’t invest at all, you never know who that connection’s own connections may be.  That is why it’s vital to include networking as an invisible component in the overall business plan strategy.  Without it, investors may never even take the time to look at a proposal or idea for an amazing company.