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Good news: you’ve landed a meeting with an investor who’s prepared to capitalize your company. But don’t start celebrating yet. Just because you’ve set up a pitch meeting is not a guarantee you’ll close a deal. The importance of thoughtful and thorough preparation cannot be understated. If you don’t come prepared, you’ll leave empty-handed and disappointed.
Raising capital is very time-consuming and takes a lot of hard work. But if you do your homework, you drastically increase your chances of success. If you’re sitting in an investor’s office completely prepared, you’re moving in the right direction.
Kinds of Investments
What kinds of businesses has this person invested in in the past? Does your company align with his/her past investments? If so, make a case for that. Investors typically stick to their own niche and invest in the same industries again and again.
Stage of investment
What stage company does the investor prefer to capitalize? Do they prefer to get in on the ground floor and reap a high rate of return? Or, do they wait until a product has proven itself in the market before investing in it? Focus on investors who prefer your current stage of development.
Size of investment
Know how much the investor is prepared to invest. Ask for too much or too little and you’ll likely leave empty-handed.
What is your potential investor’s expected rate of return? Make sure you know their expectations before walking into the meeting with prospective investors.
You’ve made the exertions and bootstrapped your business. Now what? Next comes the large task of raising outside capital. Meeting with prospective investors and persuading them to see your shared vision in your firm a critical step plus the question many young entrepreneurs request from me is,
“what do I must ensure it happens?” It all begins with three essential documents.
An Executive Summary
First, you may visit investors without an executive summary. It is a one-page document that addresses the important components of your business. In your executive summary, you
should answer these eight questions:
More often than not, people have let me know that these need more than what a page to reply to all these questions. However, you don’t. Regardless of what your company is, if you explain it in one page generally, you then don’t know it and, in consequence, neither will anyone else. Keep your executive summary succinct and confident. No potential investor is going to read something that is several pages long. They need the meat of your corporation plus your proposal. Take time to trim get rid of the fat.
In the end, regardless of how convincing your executive summary is, every investor must
understand the financials regarding a business. To generate a basic set of monetary projections and, like your executive summary, keep it to one single page. Your projections should show investors that you have a good understanding of just how income expenses will work in your corporation, in addition to how you like to generate cash.
Finally, you’re going to need a PowerPoint presentation. Right here is the presentation that you’re going to give an investor once you finally sit facing them or share online via email. Like your executive summary, this has you noticed your way to share crucial details of your enterprise within one limited time frame. In our experience, I’ve found that the perfect presentations reflect the executive summary. Share the same aspects because, in the long run, that’s what an investor wants to understand your business.
Attempt to keep your presentation short. Should you’re wondering just how long exactly, I generally recommend following 10/20 rule. For every 40 minutes that you believe you’re in order to have with an investor, spend 10 minutes talking about your particular business and sharing your presentation, and the following twenty to thirty minutes getting feedback and answering questions. By doing so, you may respond immediately and tailor your pitch driven by the way the investor sees what
you presented. Every investor is different and maybe may be more concerned or serious about one element than another. Use their questions and feedback to your current advantage.
Together with your executive summary, financial projections, and presentation in hand, you will be ready to converse with investors and maintain onto the next phase of your corporation journey.