By Colton Gardner, Founder & COO of Neighbor.com A 2018 study conducted by MIT recently debunked the idea of all startup founders be
By Colton Gardner, Founder & COO of Neighbor.com
A 2018 study conducted by MIT recently debunked the idea of all startup founders being in their 20s or 30s. It found that the average age of successful startup founders is 42 years old. Nevertheless, the Neighbor.com founding team fit the stereotype — almost too much so — as we were all younger than 25 when the company began. In fact, we were all still in our undergraduate programs.
While entrepreneurs come in all ages, there are many young entrepreneurs coming out of undergraduate and MBA programs. In a world that tends to look down on millennials and their lack of professional experience, how can you be taken seriously as a young entrepreneur?
If you’re a startup founder in your early 30s, 20s or even younger, working with venture capitalists and other investors can initially be intimidating. This isn’t the VCs’ fault — it’s just the nature of an age and experience gap. Plenty of young entrepreneurs end up with funding, and there are several ways to be taken seriously by investors.
1. Know your stuff.
The first thing you can do to earn the respect of an investor is to know your stuff. By stuff, I mean know your pitch and the venture capital fundraising model.
You must understand your business, industry, model and strategy front and back. Prepare extra material and slides for every presentation and meeting with investors. Anticipate as many questions as possible and bring answers with you. Show them that you came prepared and know your stuff. All of this will garner the necessary trust they must have in you in order for them to write you a check.
At the same time, make sure you know the way fundraising works. While the relationship should be mutually beneficial, they’re trying to get a good deal just like you. I prepared for fundraising by taking college courses on venture capital and reading books like “Venture Deals.” I learned what liquidation preference was, the difference between pre-money and post-money and many other key terms that are included in term sheets.
Essentially, you need to know what is most important to you in raising money. Don’t hesitate to bargain for the provisions you need to feel like you’re striking a good deal. Investors will respect your wherewithal.
2. Choose the right investor.
A key part of fundraising is choosing the right investor. Money is rarely in short supply if you followed the above advice and have a business model with a large upside. If it’s just cash you’re after, you’ll have no trouble finding the funds. However, an investor should be much more than a line of credit.
Ask yourselves these questions before raising money: What value do we want the investor to add? Do we need them to fill a specific role? Can they and, more importantly, will they get their hands dirty in the business? Can they critique our business in an effective way? Who can they introduce us to in the future?
Use these answers to decide what investor will add value, above just that of capital, to your business both in the short and long term.
3. Prove your worth.
The final thing I learned in being taken seriously by investors was to prove they made a good investment. This doesn’t necessarily mean immediately giving them a high cash-on-cash return. Instead, I mean acting in such a way that instills more trust in you. Most people look at youthfulness as the embodiment of rash decisions and poor thought processes. That doesn’t have to be the case.
As a company, we’ve gone out of our way to practice conservative financial practices, showing our investors we value every cent they’ve paid us. They appreciate the methodical and strategic way we operate. This is important because your early investors, if they trust you, will be more willing to continue investing in you in the future. You won’t have to look far to get more money and can have a healthy relationship that endures.
Following these three pieces of advice will set you up for success and allow you to be taken seriously as a young entrepreneur. It’s up to you to create lasting impressions in the minds of others — if you do, you’ll reap the benefits throughout your career.
Colton Gardner is Founder & COO of Neighbor.com, a marketplace disrupting the $400B self storage industry by providing cheaper, closer, and safer storage.
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