I am an engineering student with little to no practical experience as an entrepreneur. I think I’ve got a great idea, a ready and capable team, but have little money to pursue commercialising my novel product. I fear that potential investors will not take me seriously because of my age (21) and inexperience. How can I convince seasoned investors to believe in my team and invest in my idea? – Jordan Gruber, Australia
A: My friends and I came up with the name “Virgin” one day when we were 15 years old, sitting around in a basement. I was keen on the name “Slipped Disc” for our new music venture, but then one of my friends pointed out that when it came to business, “we’re all virgins why don’t we call it that?” In our case, inexperience proved to be a huge asset – if we’d gone with the safer option, I’m not sure that many people would be working out at Slipped Disc Health Clubs or banking at Slipped Disc Money!
Innovation and entrepreneurship thrive on the energy of people who are dipping their toes into the water for the first time. Budding entrepreneurs with fresh outlooks have the freedom to think differently, which is exciting to potential collaborators.
However, as you’re finding out, Jordan, translating a new concept into a product can be very daunting.
While you might not yet have the right connections or an “in” with major investors, other people out there do – experienced businesspeople, in your sector or in others, who were once in your shoes and went on to be successful. These people are potential mentors who can help you on your way.
Mentoring is a very close subject at Virgin I myself have benefited from many mentors throughout my life. However, don’t consider mentoring as a quick way to gain useful contacts. A good mentoring relationship is based on more than that – it’s a way to learn valuable lessons from the mistakes someone else has made.
Additionally, I noticed in your message an emphasis on convincing “seasoned investors” to back your idea. While securing huge sums of money from major business figures might seem like the ideal way to propel a business forward, very few ventures win this kind of funding.
A better alternative might be an online crowdfunding platform. Websites such as Indiegogo not only have the potential to fund the creation of a prototype to get your business up and running, but they also can result in significant publicity.
You could also take a small loan. In the UK we launched Virgin StartUp, a programme that provides loans of up to 25,000 pounds to companies trying to get their ideas off the ground. It is well worth your time to look into similar initiatives in your area, and decide whether a loan is the right step for you.
As an added benefit, both crowdfunding and small business loans will mean that you can retain full ownership of your business – you won’t have to give any equity away to investors. Here are three steps that can help you discover which approach is best for you:
1. Evaluate and research
Be honest with yourself about your abilities, the work you’ll have to put in to get your company up and running, and the amount of money you’re hoping to raise. Research all the options that are available, and evaluate how they would affect your end goal.
Ask yourself: Is your crowdfunding target realistic? How much of a stake in your business are you willing to give to potential investors?
If you want to find a mentor who can help give you direction and guidance, make sure you find a suitable one. Find out what they do, whether they’ve mentored others before and which sectors they are interested in.
2. Get on people’s radar
Attend industry events such as seminars and conferences. Talk to as many people as possible, and do not immediately launch into a pitch of your product. Be sure to listen and learn from what people have to say. Interact on social media, join LinkedIn groups and keep the relationships going online.
When you approach potential mentors or investors, or if you launch a crowdfunding campaign, you’ll have a degree of visibility. In fact, the more proactive you are in building your profile, the more likely it is that potential investors will feel confident enough to put their faith in you – and their money in your company. Remember the more relationships you build, the better the chances that your network will put you in touch with the people who can help your business.
3. Keep an open mind
Be flexible. Don’t discount any other opportunities that come your way. For example, crowdfunding might not have the prestige of an investment from a big-time entrepreneur, but it will connect you directly with future customers, and you will have more control over the process.
Keeping an open mind is especially important when it comes to mentoring. Don’t see mentorship as a quick fix for problems, and do not brush off aice.
Consider your connection with a mentor as a long-lasting business relationship that can teach you lessons and reduce the potential for failure. But also remember that, as with anything else, you’ll get out of mentoring what you put in. Many successful companies – including Virgin – started with modest funds. The one person who can make your business succeed is not an investor, or even a mentor. It is you. Good luck!
Mr Branson is the founder of the Virgin Group.
SOURCE: Daily Monitor