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You’ve finally done it. You’ve lined up a meeting with an investor who’s equipped to capitalize your company. But don’t pop the Don Perignon just yet. The importance of getting prepared for your meeting cannot be understated. Just because you’ve landed an opportunity to pitch your idea is no guarantee you’ll walk out of the room with a deal. In fact, if you don’t arrive armed with the proper information, you’ll likely leave disappointed.
Most investors adhere to a rigid formula in order to mitigate their risk. When it’s time to seal the deal, you need to understand the investor’s focus, needs, and wants. Consider the following aspects pertaining to your potential investor:
Historically, what types of businesses has this investor capitalized in the past? Do they have a certain functional expertise? Many investors stick to what they know, investing in the same industry over and over and developing a deep understanding of one certain niche.
Is there a niche this investor prefers? If you pitch someone in the real estate business with an idea for a scooter company, don’t be surprised when they say it isn’t a great fit. Also, don’t overlook if you’re dealing with a venture-capitalist or a professional-investment firm, does the title of the person in front of you fit the deal you’re putting forward?
Stage of investment
Are you pitching an investor that prefers one stage of development over another? Do they like to get in early and reap a higher rate of return? Or do they usually play it safe and wait until your product has proven itself in the market?
Keep in mind that many investors put a pot of money together from other investors with a directive to invest the whole pot in one stage of operation or another. Focus on investors who prefer the stage of development that you are in.
Size of investment
Know upfront how much the person you’re pitching is comfortable investing. If you ask for too much or too little, you’ll probably exit without anything.
What is their expected rate of return? Double? Triple? Ten times? Make sure you know how much they invest and the typical rate of return before going into your pitch meeting.
Different investors expect to have their money invested for various different time frames before realizing a return. Know if your investor likes the short term play or prefers the long haul.
Raising capital is time-consuming and takes a lot of hard work. But if you’ve done your homework and if you’ve been granted a meeting, you’ve just increased your chances of securing funding. Investors need to find good investments and they don’t like to waste time, so you’re sitting in their office prepared, you’re already moving in the right direction. So get out there and get funded.