Investors are busy people – and understandably so. They talk with wannapreneurs, entrepreneurs, hackpreneurs, and dozens of other “titles” in any of the countless industries. Everybody wants funding for their idea – and everybody thinks their idea is the best idea since sliced bread. This is why, before understanding how to get funding from investors… it’s a smart idea to find investors in the first place.
With that out of the way, once you schedule a meeting, here are a few things to keep in mind to make sure the investor doesn’t ignore you.
1. Business Plan
When you know what your start-up is about, have a sales forecast, industry reports to support that forecast, and know who your target market is (as well as how to go after them) – this “business plan” will make you much more attractive to investors. You’ll be essentially proving that your start-up and idea isn’t a half-baked one-off project. Your business plan is very much a “roadmap” you can show investors. And if you don’t know how to make a business plan to show investors, it isn’t difficult to get started but does require time.
Getting out of the office and going to local start-up events, mingling with communities, and getting facetime with crucial influencers in your industry… is important. (This day and age, it cannot be overstated how vital networking is for the success of your start-up.) Of course, this comes with a bit of baggage: if the idea of publicly meeting investors to talk with them one-on-one, is like trying to hug a freight train… you might want to pick up a few “public speaking” books. I cannot stress enough the value of relying on this “social capital” of the networking process.
3. Show Results First
Investors are keen on businesses that won’t fall apart down the road. This is why many people who go to investors with ideas often get shown the door: ideas aren’t measurable. You simply cannot make money on an idea: it is the execution of an idea that matters.
So, before you seek out investors, have some testimonials in hand from satisfied customers – along with records of their purchases. This gives investors the confidence they need in your business, to make sure it won’t buckle in a year or two. Showing the results of your idea requires you to get down and dirty in your business, but it’s worth it in the end. The more evidence you have in hand to prove your start-up is profitable, the better your chances are for getting funds.
If you don’t have a lot of customers, do everything you can to get them – without spending a lot of money.
4. Gift Baskets
It’s universally known that people enjoy receiving gifts. (And it’s also a fact that hardly needs proof.) Don’t neglect the power of a gift – particularly when you expect nothing in return. It’s easy to think of gift-giving as “buttering up”, but it’s only flattery if being generous is not a natural part of your good nature. When generosity is a part of your nature, gift baskets will be just that: gift baskets – perhaps you can hand over a wine gift basket over a schmooze-and-dine dinner at a 4-star restaurant.
5. How Unique Is Your Idea?
We can make the argument that ideas these days are hardly original. We could also make the argument that there are no original ideas anymore. This is why it is crucial for you to develop a foolproof unique sales position. Devoting meticulous time to this task triples your chances of wooing investors – as your USP is (in a nutshell) your brand.
Your USP is what separates you from your competitors – and differentiates you from the dozens of other businesses in your market/niche. (Apple vs. Microsoft comes to mind.) Zeroing in on your USP also lets you demonstrate, to your prospect investors, how your start-up and idea solves issues that other businesses don’t.
The USP is the one area you can use to prove that you are different than the competition – and being different is good. If your USP is like your rivals’ USP, there’s no reason investors should choose you over them if you’re all offering the same products, services or guarantees. Craft a riveting USP for yourself. Be interesting.
6. Prove Your ROI
In order for investors to get behind you and your start-up, you need to show them the return on investment they’ll get. Investors are in the business to make money, and they will not invest in ideas that do not make money. This is very much a copywriting tactic – as advertisements for toothpaste effectively say: “If you give me X amount of dollars, you will get whiter, prettier teeth.” The bottom line is this: investors want (and need) to know what’s in it for them. Otherwise, you will get a long list of rejections and apologies.
7. Do You Have an Online Presence?
Have you heard of Angel List? It’s an online list of current start-ups. In a way, it’s like a “Tinder listing” for investors to pick and choose start-ups that pique their interest. (Without being like Tinder – at all.)
These days business is done online – there’s no getting around that. Put the odds in your favour by making yourself listed on Angel List and other start-up portals (such as LinkedIn and CrunchBase). Now is the time to make yourself known to potential investors. You can include information about your team, what products or services you offer and even information about your business.
As always, there is no shortage of resources at your disposal. This last piece of advice doesn’t have to be said, but we prefer being safe than sorry: when you say you will follow up with a potential investor, follow up with that investor. Don’t be one of those people who never do what they say they will – that is the quickest way to not only lose trust, but ensure that investor never works with you again. (Would you depend on someone who you can’t rely on?)