The Best Thing You Can Be When Raising Capital is Prepared
You have finally set up that meeting with an angel investor and have everything prepared for your pitch. What do you do to make sure you hit your pitch out of the park and get a second meeting, and better yet, a check?
Be sure to address these four items that investors will always ask:
- Is the business idea simple enough for me to understand and buy into
- Does it solve a problem or meet a need
- Is there a big enough market and customer base for the idea
- Does the entrepreneur have the right team to pull it off
Aside from your business plan with a well-defined marketing strategy and financial statement, the way you look, speak, and what information you leave out during your pitch can make or break the deal.
Keep the focus on the money
While it is important that you have a product that works, in your first meeting, angels will assume that your technology works. If an investor is interested in hearing more about your product or business mechanics, they will ask about it, otherwise only spend a few minutes talking about this. You are going to investors to get money and that should be the focus. Let them know the amounts and number of investors you are will to sell equity.
Be aware of your body language
They say, “Don’t judge a book by its cover”, but investors will. You are going to have a level of nervousness, and investors know that. Come into your pitch well groomed, dressed professionally, and making direct eye contact. Don’t let them write you off because you have not showered in a few days. Try not to show any nervous ticks, like swaying side-to-side, keeping your hands in your pockets etc. Make sure you look confident (even if you might not be completely feeling it) otherwise investors may think you are hiding something.
Be clear about what you say
Present with passion and enthusiasm. You are telling a story and want to use language that is clear and concise. If you are talking about a website, use the word “website” not “platform”. Anyone can come to a presentation and read off cards, but as stated before, investors are interested in the story and want to get excited. Communicate clearly—this is my idea, here is the market, this is what differentiates me from my competition, here is why I will be a financial success, and this is why you should invest in it.
Have something to show
A presentation with 12 slides is standard for a tech product. If you have a working product or prototype bring it in to show investors, better yet if possible bring in samples for each of the investors. This is when you will talk about your research on testing your business concept, and anticipated orders or actual sales.
Be prepared for questions
You better know the ins and outs of your industry, because they will ask. You want to be prepared to answer anything that comes your way, including alternate strategies. The key is to stay cool, calm, and collected. It is better to get back to them with an answer, then slip-up and say something that does not make sense. They want to know how you will function under pressure.
Have an exit strategy
You need to provide a way out. Provide one to three year projections of how the investor with make their money back. If you say by sales revenues, you’re done. Keep in mind most angel investments take seven to eight years to reach an exit.
Make sure you have done your homework.
Common errors will get you rejected in no time. On the financial side of things, common mistakes are too high of a valuation, insufficient growth potential, and indebtedness. Other reasons for rejection include unfair competitive advantage, and a team that is inexperienced or too thin.
Follow up, follow up, follow up.
The hardest part is closing the deal. The longer it takes to close, the less likely it will get done. Make sure to return phone calls, emails, and any questions ASAP.
Want To Learn More?
This guide will walk you through the process of obtaining seed capital for your startup. This book includes:
- An overview of the angel investor process and who they are
- The milestones angel investors look for when evaluating your business
- Strategies for finding the angels best fit for your startup
- How to nurture the relationship, prepare for the meeting and deliver the pitch
- Rounding out the details and preparing for the future