Looking for investors? This serial-entrepreneur explains how to attract and land investors.
4-Part Framework for Landing Investors
Throughout this entire episode, Ben shares his 4-part framework that he uses when looking at potential investments. The first and most important part of this is the person they are investing in, not just the product or service. (People make up more than 51% of the value.) ⚖ As an investor, Ben says he wants confidence in the character of the person that he is investing in.
You can never eliminate risk, but Ben wants to work with people that have a plan for when these risks come into play. Money is not the most important part of getting a deal with an investor, there are more important elements that need to be considered.
Related Content: This reminds me of another episode… You Are The Brand. (Click here to go to that episode)
4-Part Framework for Landing Investors:
#1. People 👫
The most important part is their character. There is a heavy correlation between character and purpose; which is the foundation.
Never let your giftedness take you further than your character can.
What drives and motivates people? If it’s money, that can be a problem. Here’s what Ben looks for in a person: A focus on the greater good. Focused on people with a similar purpose.
When we look at people we look closely at their ability to persevere (Are you someone who has been through the fire and stayed on task?) and their tactfulness (Are they skilled, what do they expect to happen that they will have to overcome.)
#2. Opportunity 📈
This is the engine behind the business – This is the actual opportunity that is being presented. You can find out through questions like these:
- How big could it get?
- What’s the scalability?
- What is the size of the market?
- What’s the risk vs reward?
- What will they get out of it?
An investor at least needs to be able to quantify the market. If you’re searching for an investor – YOU HAVE TO KNOW WHAT YOU HAVE.
#3. Context 🖥
The context of a deal is the part that cannot be controlled by the actual business. It’s the world around the business. These are things that are happening in the world around us that we have no control over. Have you thought about mitigating the risk around what you’ve created? Make sure to plan for it.
#4. Deal 📑
As an investor, it’s all about weighing the risk vs the reward. Is it going to be worth it? What will an investor get? What does the overall risk look like and what could the reward look like?
To minimize risk, investors are going to look at deal structure and collateral. Risk reward ratio, overall structure, and how much money do I believe I can make?
About Ben Chatraw:
Ben Chatraw is the Founder and Chief Executive of North Avenue Capital and responsible for driving the overall vision and strategy of the firm. A serial entrepreneur, Ben has founded multiple companies and non-profit organizations. Prior to launching NAC, Ben worked at a Dallas-based hedge fund focused on lower middle market investments, which he co-founded and ran. Ben specializes in entrepreneurialism, leadership, strategy, financial analysis, and deal structuring. He completed his undergraduate degree with highest honors from Georgia Tech and holds an MBA from Harvard Business School where he graduated with distinction.
Resources Mentioned in this Episode:
- Bill Solomon of Harvard Business School
Which of the 4 parts mentioned do you most need to work on?