Author: Edward Beckmann Date: To: hampshire Subject: Re: [Hampshire] [OT] Letter to investors
Hi Damian
There's loads of sound feedback that I do not intend to duplicate, but here
is an extract of the kind of guidance that I offer people. It tends to be on
the blunt side because investors are blunt. Take it as read I am aware of
the time, expertise and heart that you have invested yourself:
1. who is your investor?
I see two types of investor - one who is in it for the return and the only
interest they have in the technical side is to ensure that your claims /
aspirations are possible. The other investor wants a return, but has a
technical interest in that they may also help with the project in some way,
or it complements their existing business in some way.
2. what known need in the market are you filling? i.e. how does the world
exist without your solution?
This is where an investor needs to see a list of the current options, their
strengths and weaknesses, and the thing that is significantly better about
yours that will make people part with money or time to adopt. It is easy to
knock any solution, more difficult to get people to prise themselves away
from an imperfect but familiar one. So the balance is not only what is good
about what you offer, but is the current stuff bad enough to leave?
3. risk and uncertainties
You are hoping for an investment in a plan, not a hope. Therefore I believe
two points are relevant:
Your plan should state how, when why etc. you will get the product to
market. In drafting the plan you will have to make a lot of decisions and
evaluate options - the value you add to a plan is not to research options,
it is to make recommendations / take decisions. Therefore asking for a wide
range of investment because of lots of variables (e.g. coding speed and
cost) tells me you have identified variables, but not solved a puzzle and
made a definite plan.
Secondly, investors acknowledge risk, which is why they demand a good
return. However, highlighting that things can be uncertain because it is a
risky business does not reduce your responsibility to explain how you will
overcome the problems. So investors are really turned off by a hint that
there is uncertainty - your role in their eyes is to have a smart plan that
deals with variables.
>From an investors point of view projects do not fail because of variables and uncertainties. They fail because you did not deal with the variables and
uncertainties. So they need to see you have a plan that will deal with them.
4. your personal finances
The time and money that you have invested so far is very relevant. However,
any problems you have in finances right now is telling an investor that you
planned to get investment later than you really needed it. Therefore they
might wonder what else in your plan is going to happen later than it was
needed ...
In summary, the comments above can be dealt with by attitude, different
wording or agreeing to disagree with me (which would not offend me), and you
are the best judge which works for you in each case.
