The startup world can be overwhelming and intimidating. We’ve watched the reemergence of startups in 2015 with over 1800 deals and $32 billion poured into venture capital investments. However, if you step back and take a look at the cold hard facts behind these staggering figures, success in the startup world is still few and far between. When nine out of ten startups fail and less than 1% of them actually receive funding, having a competitive edge in understanding the psychology behind your potential investor could be the key to placing you into the top 1%.
I recently attended an “All-Women Investor Panel and Pitch” competition in Los Angeles. The aspiring entrepreneurs had 5 minutes on stage to pitch their startup idea to a panel of female judges for a chance to win funding for their businesses.
The stories ranged from a weight loss community app to a disciplinary educational platform, and each entrepreneur presented their value proposition and most compelling offer. I saw a whole gamut of presenters (and extremes) as one presenter became flustered under pressure and stuttered through her entire presentation while an overconfident bodybuilder delivered an abrasive presentation style only to rub everyone the wrong way.
Amongst the intimidating panel of judges sat Jessica Shu. An entrepreneur herself, Jessica is most notable for her own startup at Affinity China, in which she served as a conduit between the global luxury markets and China’s affluent population. Well-dressed, poised and disarmingly powerful, she displayed a silent strength as she scrutinized each business idea with concise and astute precision, wasting no time before offering her own analysis on the viability of each concept.
Jessica has a knack for understanding what sells because she’s herself has made investments that have generated lucrative returns. She sat down with Vanity + Trade to reveal the top 6 things she looks for when investing in an entrepreneur and her responses will shock you!
“I look for someone who has failed.”
To elaborate on this point, Jessica likes to look for someone who has failed and has learned from the experience to be a better entrepreneur. Failure can be as important as success in an entrepreneur’s journey. Having resilience is key and is measured by how quickly you rebound from a fallback and how you learn to circumvent obstacles. There are brilliant, young, first-time entrepreneurs with feasible concepts that show up at Jessica’s doorstep but she prefers to invest in someone who has failed before and understand the true hardships for launching and running a business.
- The New Kid on the Block.
“I like to invest in someone that comes from a different industry.”
There’s a lot of talk on how diversity brings innovation. It’s evident in our everyday lives, even media and politics, how we stress the importance of change. In our #Influencers interview with Taryn Fixel, Founder & CEO of Ingredient1, she talks about how she was able to dominate and effect change in her sector because she did not come from a food background. “Having a different perspective actually gave me a competitive edge because I was solely focused on what consumers want and was able to do a 360 degree study of the market.” Jessica feels this is especially important for antiquated industries like real estate, films, and education.
“Working mothers have more hustle and tend to be good at multi-tasking for certain industries.”
This one is surprising. In the corporate world when men’s value tends to increase after having children, the opposite affect happens with working women. However there is a subset of entrepreneurs called “mompreneurs” who are known for their ability to multi-task, have a natural knack for running companies (based on already running their household), and possess unrivaled passion and drive.
- Willingness to Step Down.
“A good businessperson understands when they need to leave their own business.”
A good leader must be willing to evaluate themselves and understand that in the evolution of a business life cycle, there may come a time when they might have to pivot and step down from being CEO and hire someone more qualified to run their company. This demonstrates one’s ability to put ego aside for the betterment of the Company, shareholders, and investors.
- Real Work Experience Over Fancy Titles.
“Degrees don’t matter as much as experience”
Ivy League status opens doors but oftentimes experience trumps fancy degrees. “I rather choose someone who has a proven ability to execute, as opposed to someone that is groomed for the job but has no experience and only use case studies to base their experience on.”
“I look for scrappy entrepreneurs.”
People that know how to stretch a buck and businesses with low burn rates tend to attract investment dollars. Jessica believes it’s important to factor in whether the entrepreneurs are paying themselves reduced salaries until their company becomes profitable. Are they trying to save costs where they can? These are all factors that go a long way and it goes along with the first point of building a company.
Which one of these traits was most surprising to you? Share your comments with us here!