Top 10 Tips for Finding the Best Investment for Your Company

Investment is often the lifeblood of a new startup, but knowing how to manage getting the right investments at the right time and in the right way is imperative.

Typically, the first investment a company receives is between 20 and 30 percent of its value, but investments can take a range of forms. The two most common are seed money, or debt a company takes on at evaluation of specific price points, or a venture capital commitment, in which debt converts to shares given certain parameters. Regardless of which approach an organization chooses, it must manage both expectations and relationships for investment success.

Using some insights from Jon Ferrara, CEO of Microsoft partner Nimble and founder of GoldMine, we’ve come up with 10 keys that can help all organizations navigate the turbulent waters of the investment ocean. In 2017, Jon announced he had raised $9 million in Series A investment funds to scale Nimble, the simple CRM for Office 365. He also founded GoldMine CRM, Microsoft’s top ISV partner in the ’90s.

There’s plenty of money out there, but you want to carefully pick the person or company to do business with because you’ll be working together over time.

1. Know your stage. There are two stages companies should understand and be able to articulate: the concept stage and the go-big stage. In the first, you’re just starting out with little more than an idea, so VCs are less likely to invest without serious revenue. In the second, you should expect to be generating robust income and expect greater interest from VCs.

2. Build your brand. It’s never too early to think about positioning, messaging, graphics, and consistency. And don’t worry about getting hemmed in to a single approach. You’re allowed to change these facets as your company evolves.

3. Foster real relationships. What creates lasting trust? The human element, meaning reliability, relationships, and ethicality. Never lose sight of these values in the marketplace rush. And remember, people build relationships around what Jon calls “the five f’s:” family, friends, food, fun, and fellowship. Keeping these top of mind and always leveraging them is essential.

4. Be an interest magnet. Your mindset shouldn’t be one of begging. Instead, focus on building a company that has people calling you: Become trusted advisors in and around your company’s brand promise and areas of expertise.

5. Cultivate influencers. As Malcolm Gladwell discussed in “The Tipping Point,” some people count much more than others regarding their influence on culture — be it locally (a niche blogger) or nationally (Mark Cuban). Account for this disparity by including analysts, bloggers, prominent investors, and other thought leaders in your circle of interaction.

6. Put others’ interests first. Dale Carnegie knew it way back in the 1950s: Get to know people and what they care about before you talk about yourself. You’re selling your startup, but you’ve got to do it in terms of others’ interests. That’s fair — it’s their money.

7. Leverage social networking properly. Without leveraging social media across channels and networking consciously, your messaging can become off-base and ineffective. Jon notes that without social networking, there’s no way he could’ve advertised to build a brand, a network, or a community that was as relevant and authentic as the one he did. And as important as social networking (and social media) were a few years ago, they’re even more important today.

8. Don’t just partner with investors — marry them. “Picking the right investors is more critical than picking the right spouse” is a cliché for a reason. Any worthwhile investment partner has to weather market shocks and startup pivots for the long haul, which means choosing your “spouse” wisely is integral to long-term success.

9. Remember, startups aren’t charities. Investors want a sure thing — to give money to those who don’t need it but who are ready to scale. Keeping that in mind, don’t take money too early and spend too much of it. VCs expect growth, and you must deliver it.

10. Do your homework. Obsessively prepare for pitches by staying current on your space and, most of all, reading your term sheets to define investments in terms of amount, ownership, board, etc. As Jon advises, “Read every word and understand it — without a lawyer.”

With these 10 tips in mind, it’s time to put your toes in the investment waters to get your ideas and passions off the ground. And remember, this isn’t a solo journey: With friends, family, co-founders, team members, and mentors, seeking investment can be a rewarding chapter in your startup venture.