Originally published in Forbes
One of the biggest challenges to startups these days is properly building a business case that will compel investors. Once you’ve developed a great product and placed yourself in the company of good business advisors, funders want to know why they should invest in you. Proving your case with data and confidence is a place that outsiders and seasoned veterans can be a huge asset. So what are investors looking for? And, does Yelani all-natural hair care products have what it takes to make the investor case?
Investors Seek An Unsaturated Market So They Can Grow Their Investment
Yetunde Jude is the founder of Yelani, an all-natural hair care line for people with kinky or naturally curly hair. If you don’t have kinky curly hair, you may not be aware of the challenges of maintaining healthy hair and as a business person you may not be aware of what an opportunity that is.
As I participated in the Kennesaw State University The Edge Connection competition with a host of business people, many of them men, it was interesting to watch Jude present her research. Most of the men didn’t appreciate the lengths women—particularly African American, Hispanic and other women with kinky curly hair—go to in order to maintain their hair. They were also unaware of how much these women spend to maintain their hair.
As Jude contrasted Yelani with competitive products (and surprising lack thereof for all-natural products), the approximate monthly spend for alternative products and the population sizes for those with this hair type, the business people sat up. There may be an entire aisle in the grocery story devoted to shampoo, but the shelf space in this category is a tiny little piece—that spells opportunity for investors.
All business people see the explosion in organic and non-GMO products in the food category. The desire for all-natural products is booming in other products as well such as health and beauty products. According to Statista, in 2014 alone sales in the U.S. for health and beauty category were $87 Billion dollars, surprisingly only $6 Billion of which was vitamins.
Investors Seek A Good Quality Product
Jude knows well the category, and developed her product in the best lab in the world, in her home with her daughters. The product is developed in the US, with all natural products that have been clinically tested and are 100% chemical free. Yelani products have no carcinogens, silicone, paraben, sulphate, mineral oils, alcohols, toxins or other artificial ingredients. All of that diligence in formulating the product pays dividends in hair quality, but it also points to a devoted entrepreneur who has done their research and clinically tested their product.
Investors want more than a good idea, they want to see an idea that has been prototyped and tested in the real world. Jude is now negotiating with potential manufacturers for more mass production of her product, which has exacting requirements given that it is refrigerated and contains essential oils, herbs and live foods with a 1-year shelf life.
Investors Seek An Entrepreneur That Knows & Believes In Their Market & Product
Jude, who by day is a Program Manager for Compucom (MicroSoft), is passionate about hair. In 2009 she published ‘The Black Hair Care Revolution’, which was the culmination of nearly 20 years of research and experimentation with the category. The book, which is available on Amazon, is also carried in select Whole Foods locations. Jude understands that distribution is critical and is now working to leverage her relationship with Whole Foods to seek a pilot for her Yelani products.
For investors, the commitment to category through publishing, research, market testing with salons and consumer groups should speak to Jude’s ‘readiness’ to carry her product to market.
Investors Seek An Entrepreneur Serious About Their Domain & Business In General
Jude began work on her business in 2009 and secured her business license at that time while completing her book. She is now a certified women-owned business and is a member of the Georgia Greater Women’s Business Council. I previously mentioned The Edge Connection, an organization helping startups bring their ideas to market, where she recently won second prize in the business competition. Remember what Avis said in their ‘#2 Campaign’, recognized as one of the 100 Greatest campaigns of the last century by Ad Age—when you’re #2, you ‘try harder.’
Of additional interest to investors, Jude holds the patent to a hair comb for kinky curly hair and is working on patents for several others.
Build It For Customers & The Investor Will Come?
Jude is now focused on what’s next. With competing priorities for promotion, testing, patenting, piloting and working a day job, she is finally ready to speak to investors. And so begins one of the most daunting phases for any entrepreneur—the funding phase. Make sure while you’re building, as Jude calls it, ‘a better mousetrap,’ ensure you’re got a trap in there for investors—a great market, a great product and a great entrepreneur. And…in the mean time, keeping trying harder.