Whether you’re looking for first-stage funding, seeking capital for a second-stage startup or ready to sell stocks in your company with an initial public offering (IPO), it pays to seek advice from the experts.
We collected tips from famous investors, from Warren Buffett to Chamath Palihapitiya, to help increase your odds of success as you seek venture capital.
Warren Buffett on investing in yourself first
Warren Buffett, CEO and chairman of famed investment firm Berkshire Hathaway, is a savvy investor and the sixth richest man in the world. He chooses companies for his own personal investment and for his firm carefully, with an eye on the long game.
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever,” he said of his firm’s philosophy.
But if you’re a business owner seeking funding, Buffett advised to focus on yourself first. “If you just learn to communicate better, both in writing and in person, they increase their value by at least 50%... You have to be able to put forward your ideas.”
Mark Sacca on building a story around your business
Mark Sacca, billionaire investor with Lowercase Capital, seems to be a natural born storyteller—and he looks for the same attributes in companies he invests in.
“Storytelling is at the core of everything we do in this space,” he said. “Don’t talk stats and charts. Attach what you’re doing to a narrative about a problem you’re solving.”
Peter Lynch on keeping it simple
Fidelity Investments’ Peter Lynch would seem to agree with Buffett and Sacca, as he seeks businesses with simple and straightforward ideas. “If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.”
Bottom line for entrepreneurs and small business owners seeking venture capital? Be able to explain your business concept and model quickly, easily and in the most straightforward terms.
Don’t talk stats and charts. Attach what you’re doing to a narrative about a problem you’re solving.
Mark Sacca, investor with Lowercase Capital
Mark Cuban on what he looks for in a startup
Billionaire angel investor Mark Cuban has made many good investment decisions in his life, including a 9% stake in Eterneva, a company that creates diamonds out of loved ones' ashes following cremation. Eterneva, which appeared on Shark Tank, fits Cuban’s parameters for a good investment. He said, “I invest in companies that I think are compelling, differentiated and run by motivated entrepreneurs.”
Peter Thiel on finding hidden opportunities in targeted markets
It’s one thing to be differentiated in your market, but if the market is too big for a small business to stand out, you could be setting yourself up for failure. Paypal co-founder and head of Palantir Technologies Peter Thiel advised startups, “When you are starting a new business, you don’t want to go after giant markets. You want to go after small markets and take over those markets quickly.”
He added, “The most successful businesses have an idea for the future that’s very different from the present… As an investor-entrepreneur, I’ve always tried to be contrarian, to go against the crowd, to identify opportunities in places where people are not looking.”
Chamath Palihapitiya on choosing your investors wisely
Just as important as your drive, your idea and your story is the team you build. For startups seeking investment from venture capital firms, billionaire investor and founder of Social Capital Chamath Palihapitiya advised founders to look for investors who will also add value to their business beyond the capital they can provide.
“There’s so much existential risk from another company either being able to compete or to disrupt you in the same way you’re disrupting somebody else. An entrepreneur needs a real steady partner who has the ability to start working with them in the Seed or the A [round] and be credible and value-add with strategic advice,” he said.
Successful funding starts before your launch
One takeaway founders can learn from these insights is that successful funding rounds don’t start in the corporate boardroom or with slideshow presentations. They begin with innovative ideas that solve problems and founders who know how to communicate those challenges and solutions—first to the marketplace, and then to investors.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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