Are you looking to attract Investors?
Here are 8 rules For Any Entrepreneur Looking For Funding!
- CONFIDENCE IS GOOD, OVERCONFIDENCE, NOT SO MUCH – Confidence is always a good thing, but overconfidence dampens an investor’s search for reality. Investors are more interested in numbers and facts and tend to filter out emotional hoopla. Focus on explaining your growth process or how you arrived to the point where you are now. Anyone can claim to be the best! That’s usually ignored since investors are not really interested in knowing that you are the best, but rather, they’re interested in knowing how investing in your business can benefit them and help in company’s success. Investors want to know: What part of your approach may not be applicable? How have you weathered storms in the past? If needed, what tangible parts of your business can they can hold onto?
- DISCUSS BAD NEWS FIRST – Entrepreneurs often concentrate too much on the positive aspects of the business and neglect the often, undisputable negative aspects. Investors know that there are always existing or potential problems, so you must put all the cards on the table. When you clearly outline everything that might go wrong in your business, you do not detract from it. In fact, this is a useful strategy to help investors understand such occurrences early on. Leaving investors to figure out things on their own is not the way to go to endear yourself and company. When you choose to disclose all this during any initial discussion with an investor, you immediately gain credibility, and this will help build the confidence required for any potential investment to proceed to the next step.
- CONNECTIONS DO MAKE A DIFFERENCE – A current prospective investor can be the link to other favorable and well-meaning investors. Making relevant connections with every prospect is the key to harnessing these possibilities. Some connections might not earn you immediate funding or business resources, but eventually, they may lead to other people that will invest in your ideas and businesses. Sure, your leads and follow-up might lead to wasted time and effort. Therefore, you need to carry out preliminary research on any and all prospective investors and minimize such wasted efforts. Work at harnessing the benefits of connections long term and be aware that this skill can only be acquired with dedication and experience.
- JAZZY POWERPOINTS ARE NOT A MAGIC POTION – The idea of using PowerPoint pitch to tell the story is commonplace but is not always the best approach. This process of providing relevant comprehensive details and a full-scale executive summary of the business might be better. The use of slides that only detail data and then require you to further explain will mostly discourage any prospective investor looking for deep understanding of what’s in front of them. Detailed reports that provided information in well-outlined sections will go a long way in securing such investors.
- INVESTORS NEED TO KNOW WHO’S INVOLVED – Business owners and entrepreneurs always want to leave out details of other investors when discussing with prospective investors. However, it is always important to clearly describe everyone that is in the loop within the business in one way or the other. You should be able to disclose the percentages of every investor and their categories as investors, either principal, individual or institutional investors and they must be outlined clearly. Investors are always interested in who else is on their side and in what way anyone involved can add value.
- WHY DO YOU NEED THE CAPITAL INFUSION – Can you easily describe how you will use needed capital? Investors need to see a clear path on why and how any funding will be used. Remember, these fund managers are scrutinized on their investments and are fearful of failure as much if not more than anyone else. Understanding what is driving that manager’s decision and clearly addressing with your own rational explanation is the best path. Have presentations and numbers that are well organized and be sure to understand the reasons behind their questions since these are often not as well verbalized.
- IN REAL ESTATE IT’S LOCATION AND IN FINANCE IT’S TIMING – Timing is the key to working with family offices. One month, you will have the luxury of waxing long on phone calls describing your latest diamond in the rough, and the next month, you can NOT get that person on the phone at all. Family fund people are busy and especially when a large project or initiative is in play. You must understand such timing issues and have lots of patience. Do not give up on a relationship because of such issues – don’t make the mistake of taking it personally. Nurturing and patience are required to build these lasting connections which should yield long term benefits. Perseverance is the key. Investment takes time.
- INDUSTRY SPECIALIZATION IN FAMILY OFFICES – The days of a family office or Venture Capital firm looking at any type of deal are over. Today, because of the large number of players involved, specialized and niche sub-sectors have developed. Cybersecurity investors, commercial real estate, opportunity zones, the IoT universe, health care technology, the universe of funding continues to expand, and the due-diligence and expertise required for any one industry or sub-industry is more than enough to keep any small funding company busy. You must identify the players in your specific playground or risk a prolonged and difficult time to close.