5 Tips to get your Startup ‘Investor Ready’

Nearly one-third of all startup failures result from running out of cash, according to a survey by CB Insights. Let’s assume you have a good product (so you’re already ahead of 42% of those who failed because they built a product that wasn’t needed). What can you do to avoid running out of cash and succeed in securing some solid backing from investors? Let me run through 5 tips consistently used by successful startups.

Resilience is your greatest resource

As the majority of investors reject most opportunities pitched them, perseverance and resilience are essential to you seeing through the long-term success of your company. As a founder, you should ultimately be positive and optimistic about your offering. However, it pays to be realistic about the challenges that lay ahead in realising your vision. Only about 10% of founders succeed in making their first startup a success. As an entrepreneur, you’re in this for the long haul. Don’t let failure deter you — interestingly, research shows that a larger proportion of founders have success in their second venture. Most likely, this is because of lessons learnt and resilience built along the way. If this is your first startup, the odds are stacked against you. Give up too soon and you’ll be left wondering what would have been. On the other hand, being resilient will give you the best chance of succeeding through this and later challenges.

Research who will be interested in your idea

It is a common misconception that pitching your idea to the broadest possible audience will typically generate the highest degree of success — often termed “the numbers game”. This approach generally results in founders pitching to people outside their industry who aren’t strategically interested in what they have to offer. This leads to unnecessary rejection. With the right teasers, investors will look for insights into your business through your website, social media platforms and other publicly available information. You should take this time to be active in conducting due diligence on the types of investors you want to bring on board. This forces you to consider investors in terms of what they will contribute to your company other than funds alone. An investor whose only contribution is money is a liability. Seek to foster a strategically beneficial relationship.

Attract the right people to your team

Investors look for three main things in a business: the team, the product, and the market opportunity. Therefore, to build a solid foundation for future success, you should prioritise from the outset building a team with passion, compatible personalities and the right technical expertise to help your business grow. It’s worth noting that outsourced “founders” may not share your same strategic vision which can ultimately put your company at risk — ensure each founder is incentivised to support the company’s long-term strategy. On the point of executing on your business strategy, it is invaluable to have a knowledgeable mentor in your team with a wealth of experience in scaling businesses. These mentors can also help build your network and connect you to other individuals who can bring value to your business. Additionally, since investors will inevitably turn their attention to the company’s financials, it is important to have financial and accounting experts on board who can explain your business financial model to other stakeholders.

Have your business plan and financials in order

A business plan goes a long way in painting the picture of your vision to potential investors along with demonstrating the lifetime value that your business holds, irrespective of its current profitability. The plan should indicate to investors that the leadership team behind the business has thought through their personal strengths and weaknesses and has a plan in place to acquire the talent necessary for the business to succeed.
Investors will be reluctant to provide you with funds based on your ideas and vision alone, as they want some objectivity about potential returns on their investment. This highlights the importance of preparing financial data to inform investors in their decision-making process. Having secure and reliable software in place that can pull high-integrity financial data about your business will instill confidence in a potential investor. Work with your accountant and banker to ensure that they have access to all the necessary data. A nice touch is to create a direct-bank feed to guarantee that investors are viewing the most up-to-date financial information.
The most convenient means by which investors may access documents of a strategic or financial nature is through a data room. Whilst using a simple Google Drive or Dropbox is a good start, ideally your data room should allow end to end encryption at the document level (like the one provided through PEF Capital) and be separated into various ‘vaults’ for each stage of the transaction process.

Begin thinking about how you will execute your plan

Even for investors easily caught up in your business’s team or idea, ensuring there are sound processes in place will be crucial to getting them to sign on the dotted line. This generally means talking investors through step by step the key processes on which you will rely to implement your solution. Usually, this will be at a high-level but be prepared to talk details if required.
An example of this is risk management, as severe consequences can arise for all stakeholders if adequate measures are not in place. It would be insufficient to address risk from a high-level, and detailed risk management procedures should be put in place from the perspective of the specific type of risk, such as key-person risk or operational risks.
A startup’s sound processes should be well-documented with key ones accessible in the company’s data room, targeting areas such as business work streams, strategy, operation, action planning and evaluation.

Key Takeaways

We see all too often founders who begin attracting investors too early. Sometimes they believe investors will be sold on a good idea without the steps mentioned above. Other times it’s because they aren’t aware that they are not ready and could benefit from external guidance. If you are considering seeking out potential investors and have any questions, get in touch with us at [email protected]

How to Reach Clients in the Building and Construction Industry

The consultants at McKinsey  believe some businesses are about to make a fortune with helping the building and construction industry digitize and automate their operations. That’s just one of the opportunities on the table that startups could take advantage of. A few other possibilities include selling project management software, scheduling apps, CRM software and design software to the players in this lucrative industry. With construction being a 13+ trillion dollar a year business globally (calculated in Australian dollars), the potential for profiting from this industry is significant.

But how can a marketer go about reaching the right people in the building and construction industry to sell them software, automation services or whatever other relevant products and services your startup has to offer? If you’re selling to UX designers, it’s relatively easy to find them on social media — but most building surveyors, plumbers and glaziers aren’t spending their days hanging about on Facebook.

It’s easy to find them once you know where to look. That’s what we aim to help you with here: Finding your startup’s potential clients in the building and construction industry.

There are two major facets you’ll want to consider when marketing to clients in the building and construction industry. The first is inbound marketing — that is, creating marketing materials that compel your prospects to come to you because they genuinely want to learn more about what you have to offer. The second is outbound marketing — tailoring your outreach efforts to specifically target your prospects, start a conversation with them and determine whether you can build a mutually beneficial relationship. We’ll cover both aspects.

Inbound Marketing That Targets Professionals in the Building and Construction Industry

Your Website, Search Engine Optimization and Opt-In Email Newsletters

One of the most effective ways to reach clients is through your website. Be proactive about optimizing your website for lead generation. Capture email addresses and make an effort to segment your prospects. This will allow you to send out email newsletters that offer appropriate content for whichever stage of the buying funnel your prospect is currently in. Consider these relevant selling strategies for the construction industry when you create the content for your website and newsletters. Blogging is also effective if your team is willing and able to do it consistently.

Press Releases

According to Hubspot, you can use press releases for either inbound or outbound marketing purposes. If your team uses press releases, be sure to direct each message at your ideal clients instead of just the media at large; this will make your press releases more effective as inbound marketing tools.

Outbound Marketing to Reach Clients in the Building and Construction Industry

Trade Publications

Establish yourself and your team members as thought leaders in the building and construction industry by submitting content for, or obtaining coverage in, the most relevant industry trade publications.

In Australia, the following are some of the publications your prospects are probably reading:

It might also make sense to consider advertising your business in some of these publications.

Networking Through Industry Associations

There are many industry associations that bring Australia’s building and construction industry professionals together for sharing information and insights. Try to arrange for someone from your marketing team to set up speaking engagements or demonstrations of your products at trade association meetings and events.

Cold Calling

If you’re selling, for example, a product like a scheduling app that would be useful to individual plumbers, electricians or other contractors, it is possible that courteous cold calling could be an effective means of outreach. For this to work well, you have to target your calls with precision and ensure that you’re offering genuine value to your prospects. Know exactly who you’re targeting, research their pain points ahead of time, and be upfront about telling them precisely how your product or service will solve their problems. Also be sure to observe all relevant telemarketing laws.

Here’s how to reach your prospects by telephone:

You can find the phone numbers of many building and construction industry professionals in Victoria by searching the Victorian Building Authority (VBA) database.  However, individuals who hold a certificate IV in plumbing are not easily found through this database, and the relevant database for them will not help you locate unknown prospects. So if you’re specifically trying to reach plumbers, instead try searching the Master Plumbers’ database or using Searchfrog.

Tradebuild is the Housing Industry Association’s B2C database. It can be another good source for locating contact information for tradespeople in Australia, including plumbers and many others.

When you formulate your marketing plan, consider your potential return on investment from both inbound and outbound marketing. Both types of strategies can be effective for reaching your prospects in the building and construction industry.