As soon as I decided to leave the 9-to-5 grind for entrepreneurship, I started working toward starting a poultry business. Unfortunately, that business never saw the light of the day. Why? Lack of funds!
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From my feasibility studies, I learned that needed about $12,000 to start the business I envisioned, at the scale I wanted. Unfortunately, I couldn’t raise that sum. And just like that, I had to bury that idea, because I also couldn’t get an investor to finance it.
Let’s face it: So many business ideas like mine have never seen the light of day due to a lack of funds. And investors are a major means of securing this kind of cash. But getting an investor to fund your idea is no mean feat.
And to a large extent, that first meeting will determine whether you get the funds or not. That’s why I offer the guidelines below, based on what I’ve learned, to help you get your first meeting right.
1. Focus on the right kind of investors.
Initially, you should make inquiries about potential investors who already have demonstrated an interest in your business category or industry.
One way to find such investors is to post a detailed personal and business profile on a platform like AngelList or LinkedIn. Since you are primarily looking to fund your venture, prioritize the former.
Aliston Johnson, CEO and co-founder of InstaEDU, used this particular strategy to land an investment, she told me. “I sent a personal note to new investors who chose to follow my personal profile or InstaEDU,” Johnson said. “This led to several meetings and one investment.”
What was she doing differently here? She reached out only to investors who were already interested in her line of business, thanks to the investor-filtering capabilities of a platform like AngelList.
2. Ensure your business plan is airtight.
Obviously, you need to start off your efforts armed with a company name, info and logo. Investors need to put a face to the business they are evaluating.
Follow this up with a short profile about your company’s background, the market need you’ve identified and how your company will meet this need based on the relevant market and industry research you have already conducted.
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Talk about how you plan to get your offering to your customers, your marketing/distribution channels and communications strategy. Include a revenue model, describing the sales cycle and process you intend to use, to efficiently drive home the need for your product or service offering.
Leverage any communication method that will help you efficiently describe that offering, including pictures and screenshots. If your product/service is the first of its kind, include any necessary documents concerning intellectual property, such as those covering patent, trademark and copyright concerns.
Include information about your team members: their expertise, experience and roles in the business. Then describe in detail your current and projected financial situation. What equity investments and debts already exist? Include all of this information in the document.
No investor, after reviewing your plan, should ever have to ask the clichéd question. “Why should I invest in your business?”
3. Let the money come later.
Clearly, you need an investor’s money or you wouldn’t be talking to him or her in the first place. But that should not be all you talk about in the first meeting. Investors are interested in your business’s details, and why you are passionate about it, and not just how much you need.
“Your initial meeting with every potential investor should start off with you talking about your story, your passion, how your business idea was birthed and the value the product or service you’re offering brings to buyers,” said Trevor Gerszt, an angel investor, and founder of Goldco. “Explain your business first and let them familiarize [themselves]with it before talking about funding and capital.”
Sim Shagaya, a Nigerian serial entrepreneur and the founder of Dealdey and Konga, secured funding totaling $78.5 million in four rounds from Swedish investment company Kinnevik and South African media giant Naspers between 2012 and 2014. He was successful because he first offered potential investors a good business plan, pitch and presentation — before starting to talk about money.
4. Don’t oversell.
Investors like to hear the truth. Though they want to make a profit, of course, they don’t want you to offer bogus claims. So don’t make promises you’re not sure you can keep. When calculating income projections, make them as realistic as possible and consider all plausible factors.
Try not to come across as overconfident, as that can be a huge turn-off. And admit if you don’t have answers to some questions investors throw at you.
The golden rule to selling your business is to “under-promise and over-deliver.” That way, investors will be happy when they get their returns and consequently will be more open to subsequent investments.
5. Take criticisms in good faith.
Steel yourself for criticism. And take all the negative feedback that may come without lashing out. If need be, go back to the drawing board to make necessary adjustments prepare better for your next investor meeting.
Remember, too, that it’s best to accept rejection iwithout being nasty to a potential investor because, who knows, someone who’s not interested in you today might be tomorrow.
Related: 7 Tips for an Investment Pitch That Excites and Inspires
Final word: Presentation is king! How you say what you say is as important as what you say. Here’s to your success with your investors!