Calling Bullsh*t on an Investors Market & 5 Tips on How to Find the Hidden Gems
When markets turn, it’s easy for an investor to connect with those they already know and are comfortable with. It’s safe and I understand why they do it, but I believe this is the perfect opportunity to uncover those hidden gems of the investment world.
This is the time to look at accelerators and incubator programs, to look for the rising stars in the unknown places, and to look in the cities with smaller tech scenes because I can guarantee you, the entrepreneurs are there, just waiting for you to shine a light over them and see their potential.
Your job as an investor is to seek them out. I challenge you too.
Why is it the Investor’s job to seek them?
From psychological issues and underrepresentation to non-technical skills and imposter syndrome, these are just a few of the reasons why some of the best-hidden gems of an investor’s career may not be waving their hands in front of their faces. Smart investors should be looking outside of their usual haunts to find those who are hanging back, especially looking at female, POC & hustling entrepreneurs.
Barriers as powerful as imposter syndrome can stop a bright spark in their tracks, so investors need to move past KPIs and benchmarks to truly see the potential on the table. Of course, it works both ways with these types of founders needing to get past the idea of not being good enough for the market and starting to ask for advice from the right investors.
Pitching for SalonScale
Big Things in Small Places
Tech cities are on the way out, and smaller local cities are on the in.
Yes, a big statement but when you look at the tech scene, you start to see big ideas coming from the smallest of places. Take my story for example, I’m from the small city of Saskatoon, in the Canadian Prairies. A place many consider the middle of nowhere, then you count on the factor of me being a female in the tech space. Not the ideal mix for many old-school investors.
However, in 2023, location is no longer the primary indication of a good investment. Nor is our gender or industry. What matters is the idea and the drive behind it. Today’s entrepreneurs don’t need to travel to the talent, technology, or resources, they can all come to them online. So investors need to modernize their search and update their criteria of what they’re looking for to meet what’s being put on the table. Otherwise, they’ll be losing some delicious opportunities.
Open Doors, Don’t Shut Them
When an investor looks in the same place is no surprise that they keep getting the same types of investments. There are so many stories out there just waiting to be heard but usually, they don’t get past the first stage of metrics. The first screening should be ‘why’ not ‘what’.
If you ask the question, ‘Tell me what you’re building”, you’re going to hear passion, commitment, and drive. You’ll tap into a whole new treasure chest of hidden gems, who maybe don’t quite have the knowledge and experience behind their ideas, but what they do have is a story, and that can be more powerful than any basic KPI.
In my experience, I’ve found an investment into one hidden gem will connect you to all the other hidden gems in that area. Because the truth is, that the market for early-stage start-up founders can be extremely overwhelming. How will they find the talent they need? How will they scale their business in such a remote place? How will they be able to connect to the right players?
But really a great investor won’t allow those questions to stop them from seeing the potential in a start-up entrepreneur. Instead, they’ll use their influence where it’s needed, share their knowledge, and empower the entrepreneur to grow their confidence over time by bringing them into the right conversations. Which will result in those questions being answered exactly when they’re supposed to be.
The Right Vs Wrong Investor
One of the most difficult encounters I’ve ever had with an investor happened at Startup Fest. I was sitting with one of my accelerator cohort when this investor came by and introduced himself and a white male engineer, who had something that ‘was really going on’.
This was fine of course, until my friend introduced me as a tech entrepreneur at the top of my cohort. Big shoes to fill apparently, as the investor turned to me and just said “30 secs, go”. The pressure was immediate and instantly made me uncomfortable. He asked questions I didn’t know the answer to, and instead of empowering me, he tried to take it away.
I think it's because males want a challenge, or think the challenge is what brings out a fighter, is why they do this. But they got it wrong, we females have been fighters from the beginning, and therefore by challenging a female enhances the emotional response in which we shrink, or hopefully have enough self confidence to fight to be heard.
In my journey, I went away from this experience and used it to make me into the entrepreneur I am today. I learned my pitch and my numbers, then when I came face to face with him again I could recite them by heart, but instead of congratulating me, he took the praise for my success.
He wasn’t on my team, he was on his team. These kinds of investors will never find the hidden gems, because they lack the skills and grace needed to look beneath the confused pitch deck and the half-done metrics.
Here are my 5 top tips for investors:
1.Be Kind
Meet your new start-up entrepreneurs with kindness. They’re not in the businesses of billions. They’re starting a company for a purpose. They’re driven by the heart, so when you shit on these people, they lose and you do too. There’s so much potential in the rural regions, especially in the female and POC markets.
Neil Dempsey states that ‘women outpour other funds by 30%’, which shows a 3x return in half the time. Proving women can give a more positive, faster outcome yet women only represent 5% of the billions of dollars invested in start-ups. You do the math.
2. Embrace the Community
Hidden gems don’t come alone. There’s nothing they love more than to bring everyone with them as they move forward because they know what it feels like to be left behind. Connect to them, and you’ll have instant access to their networks, where there are some incredible deals to be had.
With a bit of kindness, an open ear, and some basic advice, it’ll be one of your best investments in 2024.
3. Find the Storytellers
The storytellers will make your fund. Find the real people, who have a powerful why and let them tell their stories. Instantly it will be a much easier story to tell because you can already see how the market will respond to them. A company driven by its why, lasts longer than one driven by its how.
This is the impact you’re going to make, and as we know success breeds success.
4. Back High EQ
It’s no longer good enough to just back high IQs, now is the time to back funds with entrepreneurs and funds with high emotional intelligence. Things like AI are a huge trend, but they can be squashed quickly. What entrepreneurs are really looking for are investors who can work with their emotions. And you’ll only find these golden opportunities by hanging out with female founders.
5. Invest More than Money
With this type of entrepreneur, it’s going to take a bit more investment than just money. They come from a world that’s slower and harder to get out of, so give them a bit more of your time and help them catch up to speed, it’ll be worth it.
When you connect with them, share your own story before they pitch. Get their walls to come down and connect with them. Comfort them they are safe. This is the biggest gift you can give them. So, in turn, they will become more confident in bigger centers and brighter stages.
A Final Thought
The time you spend on these entrepreneurs is part of your overall investment, spend it wisely. Find the gems that are hidden, look for the companies with culture, that already have strong teams who don’t leave and are driven by purpose. Become a support to them, and you’ll have a new advisor to help you grow your own fund.
And it’s not just those that a great fit for you. Make sure to bring them up in a room anytime they’re not being represented, that is the connection which could secure them investment. Be an advocate and understand that you are changing the lives of millions when you support those of the heart centred business world.
The world of investment is shifting towards entrepreneur-centric, don’t get left out and start your treasure hunt today. What are your thoughts on this? Investors, where have you found your best hidden gems? Entrepreneurs, how are you showing up to be found? What Top Tips can be shared to help more investments being made in 2024? Let’s share.
