Experience investors are now looking for small businesses that have an already-established consumer market and leadership potential. Lee Graff, founder of Cover FX, found her private investors “through serendipity”. (On a side note, I remember Brian Wong, founder of Kiip, said just the other day in his video that he now lives by “generating serendipity”. Then this intriguing term was mentioned again today with the Arc Initiative and Tesfaye’s story. After looking up the definition, it’s interesting to see the connection between “happy accidents” and “entrepreneurship.)
Ms. Graff’s cosmetic company caught the eye of her current investment partners due to three checklist characteristics. First, a highly specific consumer need. As discussed in the lecture about entrepreneurship, a business idea generates from an “itch you just have to scratch” and that’s exactly what she did. She wanted a product that looks as natural as human skin, but also provides coverage for various skin complications. By experimenting, testing and developing with a dermatologist, Graff finally created a line of products that suit specific needs of each unique individual. Second, the ability to work with powerful and influential investors. By stepping out of her comfort zone and taking a risk, she brought one of the founders of MAC Cosmetics on board her business plan. And finally, her products have the potential to compete on a larger scale with big brand names, such as L’Oreal. Profit in the cosmetic industry signalled Ms. Graff to enter with her innovative products, creating competition for other brand names. Of course, it’s difficult for her company to grow. This is where the private investor jumps in. Their firm can offer her an opportunity to grow and expand her business.