Investment capital is a great thing to have, but it is very difficult to obtain. Investors I have worked with in the past have told me that they hear, review, and analyze dozens of business pitches a year, and only invest in one or two. It goes without saying that seeking investment capital is a far different process than simply going to the bank and applying for a loan. You need to attract investors and convince them to invest in your project. Here are 6 ways to do that.
1) Know everything.
This applies to virtually every aspect of your business. Know your problem, know your solution, know your numbers, and know your competition. It is not enough to know only what you think is sufficient to get by. You must be prepared to speak knowledgeably for hours and anticipate every possible question an investor may ask.
2) Draw knowledge from a wide range of sources.
The more diverse your information sources, the better. It’s not only important to know what you know, but also where you learned it. Keep good records of your information sources. Cultivate relationships with experts in your field, including other business owners and advisors. These objective knowledgeable third party perspectives can be invaluable in preparing you for conversations with potential investors.
3) Decide.
Indecision in business can be catastrophic. Good opportunities can be fleeting and may slip away because the person faced with it can’t make up their mind to take it. Investors generally prefer decisiveness in business owners. This is true even if the decision ultimately turns out not to work. Being able to make a decision in a short amount of time and committing to it speaks volumes to potential investors.
4) Communicate.
If investors are calling, answer the phone. If possible, do not let them go to voicemail and do not leave emails unanswered. Send the message that you are available and responsive. Make these calls a priority and show up for conference calls and meetings on time, every time. If you ever have to put off an investor for any reason, get back to them as soon as possible. Communicating well and being on time are important practices to use not only with potential investors, but also with customers.
5) Be honest.
You should strive to know everything, but you obviously can’t. Honest communication is perhaps the most important factor in keeping the interest of a potential investor. If you have issues or flaws in your business, it is always better to acknowledge them than to deny them. Saying “I don’t know” is always better than making up an answer. Honestly is always the best policy in the long run. If you misrepresent, either intentionally or through poor communication, you will likely ruin your chances at funding.
6) Stay positive.
Even if an investor turns you down, remain on good terms with that investor. In most cases you only get one shot at securing an investor, but there is always a chance you may cross paths again. An investor who says no may also be able to point you in the direction of someone else who may be a better fit for your venture. If you burn the bridge, you won’t have a chance at any future benefit from the investor.
If you have a start-up and are looking for investors, contact us. We can help you develop a strategy and advise you on how to negotiate investment contracts and other important legal steps.
CLARK.LAW
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