When Larry Page and Sergey Brin started Google, it’s likely they didn’t envision that the company would grow into the juggernaut it is today. They certainly had their hopes set high, though.
Similarly, when Andy Bechtolsheim wrote the first check to fund Google, he probably didn’t think he’d get as incredible return on his investment. Bechtolsheim gave them $100,000 in 1998. In March 2010, that investment had grown to $1.7 billion.
So even the strongest companies get their funding from somewhere. The trick, however, is to get investors to open their wallets and finance the future of your company.
Let’s take a look at six tips you should consider prior to hosting a meeting with potential investors:
1. Know Your Research Inside and Out
Before the meeting, make sure that you do ample research on the market you’re in. You should become knowledgeable enough to speak in depth about your competitors, where you think the market is going in the future and what kinds of return on investment your investors can expect to see. Chances are, though, that you won’t have time to do all this research yourself. Consider hiring a market research company to look into your market economics for you.
2. Grab Their Attention
We’ve all been in boring lecture halls before. Immediately, you’re going to want to get the attention of these potential investors by getting right down to business — be articulate and concise. While you want to give these people a thorough presentation, it’s also important to remember that their time is finite and they don’t want to sit around talking about garbage disposals all afternoon. So be direct, showing them that you appreciate their time and don’t want to waste it.
3. Assure Them With Your 5 Year Plan
Basically, let the investors know where you see the company in five years. Be reasonable, but show your ambition and let them know how motivated you are to succeed. The more forward-thinking your plan is, the more evident it will be to your investors that you’ve done your research, and this is not some half-baked plan. Do you imagine the company growing even more after this initial round of investment? That might be very attractive to investors, who would then see an even bigger return on investment.
4. Acknowledge Constructive Criticism with Enthusiasm
Don’t ignore the suggestions that investors may have. In fact, be enthusiastic about realistic changes they suggest. This will show them that you’re willing to accept their advice which will make them feel more secure about investing with you. Plus, they may have a great piece of advice that you’ve not yet thought about. Because these people are potentially going to open up their wallets and give your business the resources it needs to grow, it’s important that you appear open to their suggestions at the very least. After all, they are also interested in your business’ success because they could also reap financial rewards.
5. Gather Your Team’s Strength
Having a strong team around you, and a strong product or service, is another way to set yourself up for success. The saying goes that we’re only as smart and capable as those we surround ourselves with. The stronger the assets you have in your corner, the more likely investors will be encouraged to support you.
6. Discuss Both Sides of the Coin
Let your investors know about your exit strategy, as well as how much money you plan to make. At some point, the investors will want to take their money out of your company. Explain how profitable you believe your company will be and why, and when they might expect a return on their investment. The more thoroughly researched and supported your claims, the more likely these investors will be to help you fund your startup.
In addition to all of these tips, there are also things you should avoid. Don’t expect a casual scenario; expect that you’re going to be a performer and the investors the audience. Don’t be sketchy by avoid answering questions directly. And don’t undersell yourself — ask for the exact dollar amount you believe you need.
The more prepared you are, the better. The more time you spend rehearsing your spiel, the more likely you are to come across as confident. Investors are attracted to confidence and knowledge, so the more time you put in on the front end, the more money you’re likely to receive on the back end.
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