Daymond John’s 1,000X Startup Investing Formula
Daymond John here.
I’ve worn quite a few hats throughout my life.
I’m the Founder and CEO of fashion and lifestyle brand FUBU. I’m an author and motivational speaker. And of course, I’m an angel investor and one of the panelists on ABC’s Shark Tank.
But my “investor mentality” existed long before I ever joined the show. It’s that mentality that’s driven me to invest in close to 100 different companies over the last 12 years.
Through the years, I’ve learned that the most successful investors follow a set of specific criteria that help them make the best decisions for their wallets and their portfolios. And today, I want to share those criteria with you, so you can develop an investor mentality, too.
Let’s get started.
1. Focus is the key to success.
When it comes to success, you can’t play around. You need to give your vision everything you’ve got and avoid getting sidetracked by other projects or opportunities.
As a startup investor, it’s important to look for founders who embody that dedication. You should always seek out founders who keep their eyes forward and locked on the end goal.
I’ll give you an example.
In my early 20’s, I was a waiter at Red Lobster while I built FUBU from the ground up. It was a great job for me back then that allowed me the time and space to build the brand FUBU soon became.
But once FUBU began to take off, I left Red Lobster immediately to put my entire energy behind the company. I had a vision, saw an opportunity, and kept my focus on that opportunity to give it plenty of momentum for success.
2. Your brand reflects who you are.
Branding isn’t just for businesses. Every single person has a brand, whether they know it or not.
Building and developing that brand is one of the most important parts of being an investor searching for deal flow. And get this… It’s totally possible for you to build a great brand, no matter how much money you have in your bank account.
How do you do it? First, take a step back and think about the goals you’re trying to achieve.
Are you trying to invest into a specific industry? Are you trying to add value beyond your initial investment? What can you offer a startup that can make a difference beyond just your dollars?
Think about your skills, your strengths, and what kind of people you want to meet. Ultimately, your presence – both in person and online – should reflect the answers to those questions.
From just a few seconds of conversation, people should know exactly who you are and what you can bring to the cap table.
3. It’s all about sales and the customer experience.
In most of my own investments, I look for sales.
An opportunity could look great at first glance, but sales are what proves that company has secured market traction.
Not only that, but I want to see that a company will continue to generate sales. A company that doesn’t have long-term sales is just a fad.
It all goes back to focus. As an investor, you need to search for startups that focus on what the market needs. What do people want, and how does this startup solve that?
I want to see lots of momentum from the get go.
4. Sometimes, you need to overdeliver to develop strong partnerships.
Back to networking. Building strong business alliances is one of the core tenets of success, and it takes plenty of effort to build that network up.
As investors, it’s important to look for founders who can build strong alliances, and build them well. Personally, I love to see entrepreneurs who overdeliver, especially for their customers.
If an entrepreneur can prove they’re reliable, dependent, and willing to work hard to fulfill promises, their startup will be all the better for it.
5. Anyone can be a successful investor if they have a vision and work hard to achieve it.
I’ve known this one all along, and my years of angel investing and entrepreneurship have only proven it. Everyone deserves a short in the startup world, no matter who they are, how they identify, how much money is in their bank accounts, and so on.
This goes for entrepreneurs. All too often, deserving groups are left out of venture capital conversations. I’m talking about underrepresented groups like female founders, founders of color, and/or LGBTQ founders whose promising business ventures still don’t get the attention they should.
Supporting these underrepresented groups is a win/win for investors, as well, and here’s why…
These founders have some of the greatest ideas in the startup space. However, they’re so often overlooked that you have the opportunity to get in on the ground floor of some of the best and highest potential ideas that haven’t yet hit the mainstream.
This is a perfect example of how the right choice can also be the most profitable one.
I’ll be back tomorrow with even more key components of my investing philosophy, so keep an eye on your inbox.
We’ll catch up again soon,