It is time to dispel a financing myth. You will often hear that investors will put money in an "A" team with a "C" idea, but not an "A" idea with only a "C" team. The truth is that you will need straight "A's" to get angel or VC money.
Certainly you need an "A" team. The investors need to know that the entrepreneurial team can deliver on the plan. The team's collective experience is the best predictor of future success. They prefer that you have managed a start-up through its growth before, and if it was financially successful that is all the better.
But, they also want an "A" business concept. It has to have market potential that is big, I mean really big. To get the multiples of their investment that they expect, they need your business to have the clear potential to grow to many millions in sales and the probability of many millions in cash flow. They also want to see a relatively benign competitive environment. Never say there is no competitive, because then you look naive, but your plan should insulate you as much as possible from competitive threats, as that is the key to unimpeded growth.
They also want an "A" exit plan. If they can't see a clear path to get their money out of the deal within a few short years, it doesn't matter how good you are or your idea looks. Today that is most often an acquisition, since IPOs are few and far between.
And investors want "A" intellectual property protection. They don't want to invest in deals that cannot be protected. In today's global economy they will often look at your IP both domestically and internationally.
So study hard and do your homework if you want equity financing, as you will need a perfect 4.0 grade point average to close the deal.
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