Get your Start-Up Running and Attractive to Investors
Having a clear vision, passion, management, advisors, plan, focus, financial model, and scale are the primary components that a start-up must have in order to make it attractive to investors. Richard Eldridge, CEO of Lenddo, emphasized this at the 4th DigitalFilipino E-Commerce Summit Manila.
Lenddo helps Filipinos who don’t have a credit score get access to small loans (up to P45,000). They only need to build a profile and add trusted social network connections to build a Lenddo score. A 400 score will already qualify the person to apply for a loan.
It can be used for education, starting a business, home loans, credit payment, among others. It can not be used though for purchase of gadgets and the likes.
Lenddo is a start-up that I wish more people know about. It is the kind of venture that will have the biggest impact on the world in 5 years. It has a great potential to empower people especially if it gets spread to more developing countries.
Online and offline engagement can get you noticed.
Start-ups face a lot of challenges. Not all can have a breakout success. Many approaches are suggested to overcome it.
Getting early adopters and influencers to try out your service and spread the word about it. Connect with digital influencers to expand your network earlier on. The more connected you are, it can increase value.
Respond to feedback, with action, based on user needs.
Getting talent to join a start-up is tougher. I noticed that some join communities where Internet start-ups hang-out to exchange ideas. If they are a positive and insightful contributor, it creates a good vibe that makes it easy for founders to yield good referrals and applications to their company.
Attracting investors
In order to raise money from investors, Richard shared the following insights:
1. Vision and Passion
The start-up must have a big and clear vision on what it aspires to be based on what it can give to its customers. Richard reminded participants then to think big and see if the vision in mind for its target market can expanded to greater markets.
While running an outsourcing firm, Richard was surprised that his young employees are not qualified to apply for a loan from any financial institution. The process of getting one was not any friendly either as it usually assumes you have assets and a guarantor who has the same.
Lenddo came out of a vision to help folks in that situation in the Philippines. But further market studies also showed that this predicament is also experienced in many developing countries. Richard then realized that they have this unique opportunity to make a difference in the world.
The company’s vision and shared to investors state, “Creating an Economically Empowered and Thriving Middle Class in Developing Countries around the World.”
Once the company starts or is in operation, it is important for this vision be seen as a reality happening in action.
2. Management & Advisors
Have a good management team (including advisory board) in place. Show that you are really serious in making your business a reality by getting the right people in place.
3. Scaling
Show growth scalability in terms of market growth in the real world and how can your business grow with it.
As population and consumption grows, Richard foresees that members and loan growth can also experience the same.
4. Financial model
Show growth of your business in terms of:
- customer size
- sales units generated by it
- customer acquisition cost
- lifetime value of a customer
As I always say in my talks, it is important for an entrepreneur to show whether these opportunities are possible:
- one time sale
- repeat sale
- short term relationship
- long term relationship
- up-sell
- cross-sell
5. Focus and prioritize
Have a clear plan in place for investors to appreciate your business’ potential.
Richard shared that Lenddo has quietly laid the foundation to become the global standard for finance based on social networks with its model.
More investors today
Richard believes now is the best time to become a start-up with so many investors taking an interest especially as e-commerce, mobile, gadget affordability, social media, among others are growing. Investors to look out for includes:
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