The funding road isn’t easy – and every entrepreneur knows that. And that is why they prepare for every investor meeting – being confident and on top of things will create a higher possibility of success. So what are the steps to take when getting ready to meet the investor?
What’s your story? This isn’t just about the product, service or company. Most investors, especially on early stage, will be investing in you – the person behind the company. They want to know about the team, how you met, how you work together. This is about how you got to this point in your business. Investors want to know what it is about your background that brought you to them with the solution you’ve created and why they need to pay attention. They want to hear about your previous experience and what makes you the right person to invest in and help your company grow. But above all, they are looking for passion – it is the passion that drives the business.
What’s the money for? You need to have a plan on what you will do with the investor’s money: operations, working space, hiring, etc. This shows that you know what steps lay ahead of you and have a plan for your business.
Know your deal. Usually, investors want to take as much equity as they can while entrepreneurs want to keep as much as they can. So it is always a good idea to know what is the reasonable split for you. Keep in mind, that it depends on the amount of money, how much you need the money, and what are the overall terms. Always do the math. The main focus is to keep the incentive balance for both: give the investor enough to be interested while not giving away too much so that it doesn’t diminish your incentive to work.
Tell about the business first. Don’t ask for money in a first meeting. An investor needs time to digest your business plan and strategy. It is like dating – you can’t expect an investor to fall in love with an entrepreneur and the business in just one meeting. That is why everyone insists on building a relationship and meeting with potential investors before actually fundraising. Asking for advice and expertise first, you are showing respect for the investor and that you seek his or her skills or expertise, not just a check.
Be straightforward. Potential investors are going to ask a lot of questions and they want you to be honest with them. As a starting company, there will be many things to figure out – it is ok not to have an answer to everything and acknowledge that you lack some skills or process. You also might want to have a plan on how to cover that – hiring an expert, bringing on an advisor, finding a partner. And you should never lie about facts – milestones, commitments, relationships, among other things. A professional investor will figure it out and word travels fast.
Be confident, not arrogant. You have to convince the potential investor that you are the right person with the ability to execute – but it doesn’t mean that you need to be arrogant. One investor once said that the best way to be confident in the investor meeting is “to give off the vibe that you know something amazing that most people around you haven’t figured out yet”.
Always follow-up and update. It’s important to follow up with a thank-you email with the investor and keep him/her updated on your progress. Continuously show them how you’re evolving and building your track record, they’ll be much more likely to want to invest.
Don’t burn bridges. Even if the investor decides not to invest now, don’t stop the communication channel. You never know when you’ll run into the investor down the line and how he/she might be interested in helping. And always be persistent – maybe the investor prefers later stage or wants to see someone else commit first. Thank them for the time and ask for feedback on what were the red flags and how to improve.
It doesn’t mean that if you follow all these tips, the investors will chase you – but it will definitely help build the relationship that will definitely be helpful to you and your business.