How to Successfully Tap Potential Investors

Successful young businessman happy falling the money while sittiInvestors look for companies with huge growth protential. They provide financial backing to those that can give them a high return in the next several years. To successfully tap potential investors, it is important to approach them well-prepared.

These people want to know right away what your company is about and your target market. You may think that starting meetings with a story about the company’s founder, the issues being addressed, and where the business idea originated will get their attention. However, investors want you to get to the point at once. This means you have to know the importance of having an effective presentation and having all the materials at their fingertips, or blow your chance.

Research Your Audience

Investors, such as venture capitalists and angel investors, have different objectives and needs. They will sometimes skip your detailed five-year plan and head on to knowing your goals. Venture capitalists are generally willing to provide more money, but they want to know when the business will start realizing profits. VCs will likely want to participate in decision-making and have a seat on the board of directors. Angel investors, meanwhile, are more willing to take risk than VCs.

Make Your Pitch Short

Your elevator pitch should not be longer than a minute. Doing so will give you a tough time raising money as investors will get bored. An effective pitch should showcase your knowledge about your company in seconds. The process of creating a well-crafted elevator pitch will take time and practice. Your goal is to deliver it as how you normally engage in an everyday conversation.

Understand the Competition

If your market is filled with competitors, it is important to inform your potential investor how you will upstage them. Understanding the competitive landscape can be critical. Your business should have a competitive advantage, but it is not enough to win the game. Entrepreneurs should only ask for financial backing only when they can present a new distribution method, a better cost structure, or a new life-changing technology that is difficult to copy.

Expect Setbacks

Entrepreneurs looking for potential investors should expect mishaps in the process. If you plan to present your business using a laptop and an Internet connection, you need to have a Plan B should technical problems arise. You can provide print-outs of your presentation as back up.

Listen Constructively

Do not let your pride take over the situation, so make sure to leave it when making a business presentation. The process can be grueling as investors tend to ask plenty of questions. It is important to be open for comments and suggestions because they can be useful in addressing some issues in your company, especially coming from experienced investors. Do not forget to thank them for their feedback.

Do Not Lie on Facts

Investors can determine when you lie about your claims. Integrity plays a major role in a business meeting and the community is too small to take the risk. You should not lie about your company’s milestones, relationships, commitments, among other things.

Many investors do not invest in the first business meeting, so make sure to follow up with a thank you email and keep them updated on your progress. Continuously showing them how you evolve can increase your chance of convincing them that you are a worthy investment. However, if the investor chooses not to invest, do not rage or become defensive. Following these tips will not guarantee that you will get them to fund your company, but they can improve your chance of success.