One of the major problems facing early stage entrepreneurs is how to create a sense of urgency, particularly with investors, but also with potential channel partners and other 3rd parties they are eager to do business with. There are at least three good ways to create a sense of urgency:
- Competition – the best way to get investors or others to act is to let them know, subtly, not aggressively that they have competitors out there. That’s when FOMO kicks in – Fear of Missing Out. Investors tend to network and know each other, so if you have a term sheet or other evidence of strong interest from an investor, word will get out. And you want it to get out. Competition validates. Competition drives valuation. Competition is the best friend an entrepreneur seeking investment can have. So keep those conversations with investors going. Until your check clears the bank you should keep working to have multiple investors very excited about your company. They may even syndicate the deal.
- Traction – the difference between a startup and a small business is that growth is the metric and goal for startups; security and profitability are the goals of most small businesses. So the number one thing that most investors look for is customer traction and its growth rate. And engaged customers, not just eyeballs! Investors tend to like to sit on the sidelines and watch to see how you execute. To get them off the sidelines and into the game they need to see what they are watching for: explosive growth. Building virality into your product from the get-go can trigger that explosive growth.
- Buzz – buzz today almost always means going viral on social media. Perception becomes reality and the herd mentality takes over. But even the old legacy media of print, TV and radio can help you create buzz. Buzz draws attention. And if you are offering an opportunity: to investors, to job seekers, to developers for your platform, to customers, buzz can help get them to take action. Buzz is activating.
Startups need to move fast, but that’s under your own control. Getting others, especially investors, to move fast is the real challenge.