Why Investors Should Stop Investing in Ideas
As the saying goes, ideas are a dime a dozen. The execution of the ideas are what matters. And who has been executing brilliant ideas throughout history? It’s being accomplished by entrepreneurs, experts in their field, historians, scientists, brilliant minds of our time. Nikola Tesla revolutionized various different things, but there are so many of his ideas that you probably don’t know about because they either failed, or they just didn’t catch on with the public. But this didn’t stop investors from funding his ideas over the course of his lifetime.
So why don’t investors today invest in entrepreneurs instead of their ideas? I can give you so many examples of entrepreneurs who have raised tons of money, but then failed miserably just six to twelve months after receiving the funds. It seems as if the investors thought their idea was good, and it might have been, but the entrepreneur behind the idea wasn’t quite the right fit. Then you have entrepreneurs who are just brilliant, and have of an arsenal ideas waiting to be made. These seem to be the entrepreneurs who never get funding, because investors want proof that these ideas can be executed, and even if one of the ideas has been executed by this entrepreneur, it still seems to be almost impossible to get funding.
There are so many politics and connections involved with getting funding that it almost seems as if an idea isn’t even enough anymore, and neither is an entrepreneur. Instead it’s their connections or ties to investors or politicians. Investors tend to spread out their investments throughout a wide variety of companies hoping that one of them will hit big. The likelihood of this happening is slim to none. So why not instead invest in an entrepreneur, who has a proven track record of executing ideas. This way, whether or not the entrepreneur succeeds or fails, that entrepreneur has a slew of other ideas up his or her sleeve ready to execute once again, until one of them is a hit.
Plenty of investors out there say that they invest in entrepreneurs and not ideas, but in my five years of running tech startups and pitching hundreds of investors, I have yet to meet one.