Do These 4 Things to Make Your Startup Irresistible to Backers

By adopting an investor mindset, you'll reel in the Venture Capitalist funds.

learn more about Rob Biederman

By Rob Biederman

Opinions expressed by Entrepreneur contributors are their own.

As most entrepreneurs have learned firsthand, an idea is rarely enough bait to get a venture capitalist to bite.

Investors want to see traction and be convinced that the idea can be scaled in a capital-efficient way. VCs also need to know that the fledgling company believes 100 percent in their product or service and a viable market opportunity exists.

If you can prove that your company is the one best poised to address the target market, you're sure to get a few nibbles.

For HourlyNerd, communicating our goal of disrupting the way enterprises solve problems -- beyond the small business market we were already serving -- was key to hooking investors. We knew no one would want to back a company in pursuit of a $50 million prize; venture capitalists seek to invest in life-altering products that have the potential to transform consumers' everyday lives.

So how do you cast a line that will catch investors interested in your startup?

Related: 5 Mistakes Entrepreneurs Make When Pitching Their Ideas to Investors

1. Target the right investor for your business

Your product will never be everything to everyone, and the same concept applies to investors.

Start by looking for potential investors who can uniquely impact your chances of success (usually people who either know your industry or are well-connected within it). The best investors will also give you enough leash to make your own decisions while making themselves available when you need guidance or advice. Admittedly, this is a difficult quality to assess, but talking to current portfolio companies is a good start.

Consider who's investing in both your space and in similar business models. If you're starting a labor market, for example, make a short list of investors who've backed companies not only in that industry, but also in industries that connect humans through technology, i.e. dating sites.

2. Make your outreach relevant and contextual

When sending an initial email, quickly and concisely explain your unique position in the marketplace. Do the same to explain how your company solves an existing problem, and frame both in a way that provides context.

Investors often want to know why your business model is the X for Y, such as the Uber for food or the Airbnb for contract work. Without a signpost, the investor might struggle to envision your company's place and necessity.

Related: How to Find Investors Through LinkedIn

3. Adopt an investor mindset

Investors think about opportunities as combinations of product, market and team. They want to see a fleshed-out and functional product, as well as evidence of a clearly underserved (and sizable) market. They also want reassurance that your team has the skills and chemistry to chase down a big opportunity.

But your success doesn't hinge on all three factors combined. A superior team, for example, can make up for a relatively undeveloped product. Market share is typically the hardest to compromise unless you have a bulletproof plan to grow it.

4. Nail your pitch

Your sustainable competitive advantage should be the centerpiece of your pitch, which provides a clear, linear path to scale up and a distinct plan for protecting your customer base.

You also need to demonstrate the unique solution that your company brings and explain how it soothes a particular pain point for customers. Who will miss your company if it no longer exists?

Lastly, don't forget about the numbers. You should know how much money you need to raise and be able to justify that particular amount. How will the funds be used? What milestones will the money allow you to reach? Investors want to know that you have a game plan for maximizing their investment.

Whether you're targeting VCs, angel investors or corporate investors, these individuals are wagering money on your idea. They need to know that it can scale in a capital-efficient way. By adopting an investor mindset and positioning your competitive advantage as irresistible, you'll reel in the perfect catch.

Related: 4 Steps to Help You Prepare for the Fundraising Process

Rob Biederman

Co-founder and CEO of Catalant

Rob Biederman is the co-founder and CEO of Catalant, a company that connects companies to talent and knowledge in real time. Catalant has a global network of more than 40,000 experienced consultants able to work on research, strategy, marketing, finance, sales, operations and product initiatives.

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