- Learn the step-by-step process of preparing for investor meetings and how to maximize success. Get insider tips from industry professionals on how to stand out and make a lasting impression.
Startup funding is one of the most competitive ways to get capital. That is because investors meet with thousands of hopeful entrepreneurs with promising business ideas every year. To stand out from the competition, entrepreneurs must approach investors with their A-game.
If you lead a startup, you know that you won’t get far without enough capital. Lack of financing is one of the leading reasons why startups must close their doors. If you want to up your chances of securing much-needed funding, follow these steps before meeting with investors.
Collect All Essential Data
Investors need to understand the ins and outs of your company in order to consider funding. Your presentation must include all of the information they need to make their decision. This includes the following documents:
Pitch deck: A pitch deck gives an overview of your business plan. This includes the problem you intend to solve, the market you hope to tap into, and the expertise and skill of your team.
Effective pitch decks are a compelling blend of quantitative data and engaging storytelling. You can review interactive presentation ideas and platforms to make your deck more dynamic and memorable.
Financial Statement: Investors also need your finances to complete their due diligence and determine if your business is a sound investment. A typical financial statement will include your business’ assets, liabilities, and total net worth. It is important to also include how additional capital can improve these figures for the better. This reassures investors that they can see a return on their capital.
Brainstorm Questions and Answers
Most seasoned investors will have a ton of questions during the pitch. They need to understand how your business will excel in an area where hundreds of other companies have failed.
Preparing for investor questions beforehand will give you an edge during your presentation. Not only should your answers be thorough and complete, you should also deliver your responses in a way that inspires confidence.
Investors want to see that you understand your product and market inside out. However, you don’t have to be a know-it-all. Being honest about your shortcomings, especially if it is an area where the investor’s expertise can fill in the gaps, can actually increase your odds.
Take some time to review possible questions and counterarguments that investors may make to your answers. You must also be aware of your business’ weaknesses so that you can defend yourself against objections. When investors bring up potential difficulties, be prepared with a response on how you will overcome them.
Refine Your Business Plan
While the core of your business plan should remain the same, you should tailor some of your presentation to your investor. One aspect to keep in mind is how different types of investors assess risk. For example, investors who provide loans have very different concerns than those that purchase shares.
Lenders are more concerned with your cash flow and your ability to pay back your debt. As their returns are capped, they are less interested in long-term projections. Equity investors on the other hand are looking to increase their investment by growing your business over the long term. However, they want to make sure your business is viable, so they don’t lose their initial investment.
You should also take into consideration the stage of your business. Most early-stage startups do not entice investors with immediate short-term returns, as the focus is generally on growth and gaining market share.
Investors who believe in your product will be willing to fund your expansion. However, you must make your intentions very clear in your presentation.
Practice Your Pitch
Once you’ve refined your business plan and collected all of your documents, it’s time to practice your presentation. Start off by outlining your talking points and going through each one by one. Most likely, you will revise your pitch a few times before you settle on a final version.
Get feedback by reciting your presentation in front of an audience. Try to engage people with different levels of knowledge about the business world and your product. Your more informed audience can critique the validity of your arguments, while less knowledgeable listeners can let you know if your idea is clearly presented.
You can also record yourself giving the pitch and review the recording afterward. This can help you analyze your body language, tone of voice, and other non-verbal cues that may help or hinder your presentation.