Raising capital for your start-up is one of the most difficult yet most important parts of being an entrepreneur. While not every entrepreneur will be in need of investors, every startup looking to raise money will need them — whether that means venture capitalists, angel investors or personal investors.
f you’re an entrepreneur looking to begin searching for investors to start growing your business, here are eight steps to follow:
Create a game plan. As an entrepreneur looking for investors, you need to include the following in your plan:
- Establish the problem you’re trying to solve and provide the answer as clearly and concisely as possible.
- Highlight the unique feature(s) that make this product or service stand out from the rest.
- Use that selling point to develop a short elevator pitch that lasts, start to finish, less than 118 seconds.
- Identify future milestones and calculate how much capital you need to raise.
Visual is always better.We’ve all heard the saying, “A picture is worth a thousand words.” A picture or any visual image can say more about your product than just a bunch of words on paper. Investors like to see something tangible that can help them understand the intricacies of the product you’re trying to get them to invest in. Whether it’s a PowerPoint presentation, animation or short, introductory video highlighting special features, this will help you stand out and make your pitch memorable.
Use a business development approach. If you know anything about business development, you know that closing doesn’t always mean “immediately.” This is a long, drawn-out process that takes time and patience. On average, you could spend anywhere between three and six months working to close the deal. During this time, you must be clear about not just your company’s value proposition, but also the focus of any VC you’re planning on talking to.
Target the right people. We’re all busy people and you’ll only have a short window to address your potential VCs. However, not all VCs will be interested in your approach. If you’ve scheduled ten investor meetings and six of them fall in your wheelhouse, target those first. You might be able to turn one or two with a persuasive pitch, but if you don’t target those of most value to you, you will be wasting everyone’s time.
Networking is constant. Even when you’re standing in line for coffee, you are networking. You never know if the person in line behind you can be a potential opportunity for you — or knows someone who could make things happen for you. Co-working spaces can be a way for you to expand your network.
Practice makes perfect. Again, not a new concept, but one that never seems to get old. Setting up multiple meetings is only half the battle, so pace yourself. In order to make an impact, you need to:
Have realistic expectations — because chances are you’re not walking away from any of these meetings with a check in hand.
Do your homework and know whom you’ll be talking to. If you have a hobby in common with a potential investor, use that. Everyone likes to interact with like-minded individuals.
Be ready for questions — have someone pepper you with tough questions prior to your meetings. Practice those answers because you will get tough questions.
Remember your goal — get a second meeting. Be prepared to ask, “When’s our next meeting?”
Tell your story.Many people make the grave mistake of telling people what they like to hear, thinking this will get them somewhere. It won’t. It comes across as inauthentic and will jeopardize your chances at getting people to invest in you.
Be persistent. It’s perfectly okay to follow up after a few days or even after getting a “no” the first time around. If you get a “no,” ask “why.” One investor’s feedback might be invaluable as you move on to the next one.