4 Ways to Get Backed by Tech Gurus or Star Investors
Let's admit it: What startup founder hasn't dreamed of a little fame and fortune? The reality is that you're more likely to attain both quicker if you consult with a well-heeled entrepreneur or investor who can use their investing savvy and star power to help scale your venture. But how do you get noticed in the first place then maximize their strengths to your greatest advantage?
1. Get acquainted--then grab their attention.
Find out exactly what investors pay attention to when considering a deal but ahead of your own "ask."
Ruzwana Bashir of San Francisco got this opportunity when she worked at Artsy, an online platform that makes art accessible to everyone and where she pitched Jack Dorsey, Twitter's co-founder, and Eric Schmidt, Google's executive chairman. That initial contact--and knowing what the men liked in a pitch--made it much easier when Bashir approached both of them again to ask for investments and advice to grow Peek, a travel activities-booking site that she later co-founded and now runs as CEO.
"If we had not had those existing relationships with those investors based on the work we had done in our previous companies it would have been challenging to get into the door," says Bashir, whose team has raised more than $6.5 million.
2. Capitalize on their interest--and their network.
Madonna might be interested in becoming your company's poster girl. But you don't have the cash to finalize an endorsement deal or launch an advertising blitz. What's your next move?
This was the dilemma the co-founders of Vita Coco, a coconut water company, faced a few years ago. Instead of ending the conversation, co-founder Michael Kirban said he did "the only thing I could think of"--he invited the singer to join a small investment round. The move worked, and he says Madonna then helped secure other famous funders, including Demi Moore, Matthew McConaughey and Rihanna, some of whom have also shared their marketing expertise while helping to grow Vita Coco into a $275-million-a-year business.
3. Be ready with that business plan.
Come prepared to a meeting with a business plan, even if it seems like just a casual brainstorming chat. 24-year-old Kevin Hernandez initially reached out to Bill Draper, the tech investor whose hits have included Skype, Hotmail and OpenTable, to discuss options for structuring his startup RecCheck--a Silicon Valley-based app that connects people who like playing pickup sports.
Hernandez used the time to "ask as many questions as possible," after which Draper requested a business plan for review. Hernandez took a week to whip one into shape and still managed to secure $25,000. But there's always the possibility of getting a higher up front commitment if you can impress an investor sooner.
4. Foster a creative partnership.
In 2011, Toronto-based Flixel Photos managed to raise $250,000 from multiple angel investors for a free app it was planning to release that could create cinemagraphs--a mix between a photo and a video where part of the image moves. But it really started to gain traction, and spawned a fee-based version, after a second seed-funding round where supermodel Tyra Banks joined as an investor and worked out a deal to feature Flixel's cinemagraphs in the latest season of her show, America's Next Top Model.
"It was only when the show aired that we started charging," says Philippe LeBlanc, the co-founder of Flixel, which has raised more than $2.3 million so far. "The show helped with the exposure."
NEIL PARMAR | Columnist
Neil Parmar writes about technology and startups. He's also the managing editor of WSJ.Money magazine and a professor of journalism and social entrepreneurship.