Are you ready to talk to investors? How well do you know your own business?
Your startup company is just emerging and you already foresee the future evolution of your company.
However, your bootstrapping efforts can only take you that far and if you want to scale your business and increase revenues, you need to go big and attract the venture capital firms to your startup.
That should be easy, right?
Well, before you go down that road, you need to understand that entrepreneurs and investors share different business visions and expectations.
If a startup founder dreams about scaling the startup business and drawing high revenues as fast as possible, an investor will always try to avoid (or compensate for) risks to make sure the invested money will someday return in one form or another.
Since investors need to assume a number of risks, they are interested to have some leverage in the company’s future decisions in order to protect their investment. More importantly, they need to hear how exactly you are planning to bring back their money.
Let’s get down to our topic and understand the key factors you need to analyze in order to align your business interests with your investors’ needs.
4 Things You Need to Do before Approaching Investors
1. What’s your business plan?
It is important to have a clear marketing plan that is obvious and easy to follow by your entire team. Don’t assume every member of the team knows what’s in your head and why things should be the way you see them.
The same thing is valid for the investors who would like to know what your business is about and how will you be able to sell your products and services.
So, do you have a clear business plan and what it takes to follow it?
What about your team? Who did you hire to do marketing, content, social media, SEO and PR?
These questions you need to answer before talking to investors. Because they will ask them.
As a word of caution, we have to mention the numerous startups that go into the opposite direction and place much more importance on the marketing efforts instead of giving the same importance to the actual product.
2. Do you have a financial plan?
Ok, that’s the reason you want to reach investors, but every business should start with some bootstrapping efforts and you should organize your business around keeping a basic accounting report of your initial expenses.
In addition, it is good to have already attracted some small investment or some paying customers before talking to investors.
Investors really appreciate serious entrepreneurs and businesses that lose no time and already go out there into the world.
So, keep your numbers close and your financial reports up-to-date.
3. Do you know your industry?
How well are you connected to your industry? What are the latest news or the latest technological trends that will change the rules of the game?
Who is your competition? What are your rivals doing better or worse than you? What’s the piece of novelty your business brings?
Now, let’s be straight and admit that your business may be a copycat of another business, but we need to know what are you doing better than your competition?
4. How good is your pitch?
Before standing in front of an audience and do the talking part, one must prepare the pitch.
Are you ready to talk and convince the investors of your startup’s viability? Can you answer to all their questions?
Do you know how to prepare a great pitch?
Basically, you need to remember that all investors look to understand what your business is about, how it can become successful and who are the people behind.
If you manage to bring satisfactory responds to the three points above, than you should be ready to approach the investors.
There will always be a large gap between an entrepreneur’s dream and an investor’s pragmatic point of view.
A startup founder will always be caught by the idea of growing the company and establish it into a respected player on the market, which bringing some elements of novelty and innovation to the table.
On the other hand, entrepreneurs analyze everything from a pragmatic point of view and are somehow biased by the past experiences which proved successful or not. They try to avoid risks and prefer to place safe bets.
Can the two points of view be correlated and brought under the same umbrella of common interest?
We believe so because at the end of the day both parties are in the same boat and investors need entrepreneurs’ drive to build successful companies as much as entrepreneurs need investors’ money to build the dream.
Do you believe it is difficult to reach investors for your startup?
Why don’t you join a tech incubator that is specialized in providing technical and marketing support alongside great financial assistance?
If you have the right ideas, we have the right tools. Contact us and let’s talk business.