How to Impress a Potential Investor
Whether you’re starting a new business or attempting to grow an existing company, finding funding is a constant challenge. Startups need investment to get off the ground, but even successful businesses will continue to need outside capital so they can meet their objectives. An effective strategy to attract funding is an essential part of any business plan, and that means impressing potential investors with what your company has achieved so far, and what it is likely to achieve in the future with their help.
Potential sources of funding range from friends and family to venture capital firms and angel investors. All require different tactics, but in each case, you need to convince them that the available rewards make the risks worthwhile. You also need to make those rewards seem tangible and probable, rather than just a vague possibility.
Tailor your approach
An investor meeting is like a job interview, but for a whole company rather than just one person. You need to look right, say the right things, and walk and talk like a confident professional who knows exactly what they’re doing. As with any job interview, you need to tailor your pitch to the person or investment firm you’re approaching, so thorough research beforehand is essential.
A high-level investment executive like Joel Werner at Solitude Capital Management will have heard a million pitches and won’t be fooled by any nonsense. Get to the point and work on your presentation. Be prepared: this is your big opportunity, so don’t leave anything to chance.
The bottom line is that investors are looking for growth potential. If they put money into your business, they want to see returns in the shape of a company that is continually getting bigger, better and stronger. However, showing them that your company is growing isn’t a straightforward matter, as there are several different metrics that can be used to measure growth.
These indicators include profits, revenue, sales, company value, the number of customers you have and the number of employees on your payroll. A growing company needs to demonstrate a sustained and sustainable increase in at least one of these areas, though not necessarily all of them.
Ask which metrics are most important to your business at this stage of its development. Does it make sense to focus on expanding your customer base at the expense of increasing revenue? Or is it more important to concentrate on existing clients and getting them to spend more or engage with your services more regularly?
Potential investors will want to see a capable and motivated team, implementing a credible, growth-focused strategy. You’ll also need to have infrastructure and funding in place to support the growth you envision. Just like with a software product roadmap, demonstrating these key points will go a long way towards convincing investors to come on board.
Do the math
When you pitch, you need to show clear figures demonstrating what you’ve achieved so far, and what you are going to achieve in the future. Progress reports and charts are evidence that your vision can and will succeed, in the hard language of numbers and statistics. Be honest and transparent: let them know what your margins are, and how you intend to hit your targets.
Any investor will want to know that their money is in safe hands. They’ll want to know how it’s going to be spent, and what kind of return they can expect. Keep the channels of communication open, with regular updates to stakeholders.
A positive mindset is a necessary quality for promoting and managing a business, but you shouldn’t let that blind you to all the possible objections and flaws a potential investor might point out. By anticipating these, you can compose credible answers that will impress them far more than glossing over any criticism. You might also discover genuine misconceptions and weak links in your strategy that need fixing.
By asking yourself the difficult questions in advance, you’ll build a stronger business plan and will walk into any meeting with genuine confidence. Having the facts and figures on hand to counter any doubts a potential investor might have will let you demonstrate your company’s resilience and foresight. In doing so, you can turn a tough Q&A session into an opportunity to further demonstrate your capability.
It’s important to sell your passion and your vision to an investor, but at the end of the day, the focus must be on results. Show them what you’ve achieved and what you will achieve with their support, using concrete statistical evidence to back up your claims. Let them know why your company is unique, and why you are the answer to a problem that no one else is solving. Finally, let them see that you have a team of people able to realize the goals you’ve outlined.
When everything else is in place, funding should be the final step to making your vision a reality. Offer an investor a credible package that they can believe in and future growth that’s sustainable. The rest is up to them.