“Translating Entrepreneurial Passion into Growth Capital” written by Tom Villante, Chairman, CEO & Co-Founder, YapStone.
Although the capital markets seem to be running into some headwinds going into 2016, there is still funding available for emerging startups. Investors are tightening their requirements from startups and want to see that a concept is gaining traction and momentum before they invest. The traction could be defined as growing the audience or delivering real revenue, yet it still has evolved into a “chicken and egg” scenario for startup CEO’s trying to raise capital. The challenge is obvious – many startups need capital in order to build traction.
As Founder and CEO of FinTech payments company, YapStone, I’ve been on both sides of the coin. No pun intended. When we launched YapStone, we had to raise seed capital from early investors – based on an idea and business model, yet no significant revenue. 16 years later, I’ve now found myself investing in businesses myself.
Seeing investments play out from both sides has offered an interesting insight: Entrepreneurial passion has a direct effect on how much capital is received.
Yes, you will find that most investors need to see traction first. In this case, I suggest you either bootstrap your business or seek funding from family members or angel investors as your initial step. But if you can’t pull together the funding in this way, you can still apply for seed investments – it’s just going to take a little something extra.
You often read about having “passion” on business websites like INC and Entrepreneur. The stories are usually focused on the story of how “passion is the secret sauce characteristic” that keeps an entrepreneur true to their vision, keeps them motivated through adversity and drives them to success that they never imagined. I would add that having incredible passion actually sends a deeper, more meaningful message to the market and to investors: this person will do anything to make this business succeed. And therefore – they want in. I have invested in many individuals for this very reason.
In order to show an investor that you have extreme passion, it’s important that you go all in. Moonlighting as an app developer or wanna-be entrepreneur while you have a full time job just doesn’t cut it anymore. The competition is rife and if you can’t put your whole brain towards an idea – it won’t likely reach its full potential. If you really believe in your idea, product or service, you will find a way to work on it full time.
Being “all in” is very telling to an investor. If you are able to convey your enthusiasm and drive to an investor – chances are, they will more than just give you some time, they will participate.
I was angel investing in the late 90s by providing seed capital to start-ups and also investing into ideas I had hatched. At one point, I found myself trying to build and grow five companies and I wasn’t particularly doing a great job with any of them. Fortunately for me, the online payment company that I founded in 1999, YapStone, showed great promise. We had a great business idea to build an electronic payments solution for underserved markets (apartment rentals, vacation rentals, HOA dues and online marketplaces) and I realized in the first year that I had to go “all in” to make it work. Today, over 16 years later, I am proud to be CEO of YapStone as we are an established payments company and with accelerating growth and great opportunities.
Veteran entrepreneurs often say, “If you can be happy doing anything else, then do the other thing.” If you have the calling to be an entrepreneur, then bring the passion to what you are doing. Commit to it, live it and put in the time and effort. And the consequence of that passion will be partners and investments.