You’ve got a good business concept and you’ve researched potential investors. You’ve been living and breathing this venture for years – your passion is palpable – but working out what investors want to know can be overwhelming.
How do you not waste potential investors’ time with superfluous information?
Here’s eight tips to help:
1. Be true
Make sure you are honest and integral. If an investor senses an inconsistency, experienced investor Matt Macfarlane of m15e ventures says “they will run for the hills”.
2. Practice your “elevator pitch”
This is a brief synopsis of your idea, the willingness of customers to pay for it, and your background (because much of the final decision to invest is around the strength of the team). Include the potential growth of your business and scale of the market opportunity? Also know how your business differentiates itself from others, what others are doing to solve the same problem and why you are able to do it better than anyone else. Macfarlane says if you claim “there are no competitors” and “it has never been done before”, you’ll be more likely rejected by investors.
3. Make your passion infectious
Investors want to see passion for the problem your business is solving and a clear vision for the solution. They want to see your persistence. They want to see your history of being aligned to the industry area and/or (if applicable) dealing with investors.
4. First meeting
Ask for advice, not money. When you get the advice, either implement it, or if you don’t, explain logically and with evidence why not.
5. Own your failures
It doesn’t matter whether you’ve lost money or been unsuccessful in the past if you have learned from it. Show your investor how your mistakes have made you grow and what you’ve learned. Macfarlane says it’s good when entrepreneurs show they’re trying again because it demonstrates their determination. “You have to be honest and upfront about past performance and be able to say why it’s going to be different this time,” he advises.
6. Be coachable
Make sure you’re willing to listen to advice and commentary and either implement it or respond to it respectfully. When you’re in front of a potential partner you need to show your ability to listen, react and really hear what the person is saying.
This “coachability” is absolutely integral to the future success of the business and your relationship with your investor.
7. Take what you need
Make a checklist and take the following to any meeting with a potential investor.
- A business plan
- A forecast of revenues and market share
- An understanding or analysis of the competitive market place
- An ability to answer very detailed questions about financials and other aspects like marketing and, how sales distribution will flow
- Corporate and team structure
- A broad understanding of what needs to be done in the next 12-18 months
8. A clear statement of fundraising outcomes such as:
- How will the money be spent?
- How will founders’ salaries be affected by fundraising?
- Will the money be swallowed by technology?
- How will the money develop the product further?
- What will be spent on marketing and campaigns?
