When it comes to closing a deal, many entrepreneurs find it difficult to closing it with investors.
To become an entrepreneur, there is one skill that you may need to have or develop above all others, marketing.
You might be the best at what do, others aren’t aware of it, which is where your skills as a salesperson come into play.
An entrepreneur must sell not only to clients but also to investors, and one of the most feared duties cited by prospective or existing entrepreneurs, according to corporate experts, is selling to investors.
Even though some entrepreneurs try to fund their own startups, this is generally not practical for more capital-intensive firms.
In this article we would explore some crucial aspects to bear in mind when approaching out an investor so you don’t get caught unaware.
How much money do you need and for what?
Before approaching an investor, you must know how much money you have, how much money you need, and what you plan to do with it.
Investors will be thrilled negatively if you do not understand the state of your own firm or do not have specific ideas for the future to answer these issues thoroughly.
Overall, keep in mind that the investor wants to know how much your firm can develop with the funds from his investment, as well as what this economic increase means to him.
It’s like going to farm without tools when you’re standing before an investor with only the most basic facts about your firm and what you intend to get out of the investment.
You will simply tarnish your credibility and squander an excellent platform.
What are your alternatives?
The form of investment or investor you should seek depends on the quantity of money you require.
Consider investor angels if the sums are tiny, between $100,000 and $1 million. Angel syndicates or tiny seed mutual funds with investments ranging from $1 million to $5 million.
If you need more than $ 5 million or perhaps $50 million, venture capital is the way to go. Seek an international investment fund or a group of local funds for investments of more than $50 million.
It also considers the fact that not just the quantity of investment, but also the investment thesis, fluctuates.
There are investment capitals that assist only tech businesses with a defined social mission, only environmental projects, and so on.
You should be familiar with the investor’s background before approaching them, as this will guarantee that the fund will assist you not only with money but also with their knowledge and goals.
What kind of return can you expect from the investment?
It is critical that you produce a business strategy to illustrate the capabilities of your organization.
Firms with business ideas doubled their capital in the first year, according to a Babson College research, as opposed to those without.
Investors need you to know everything there is to know about your target market, your increased potential, the cost of acquiring new consumers, and the most critical KPIs concerning your company’s health.
Above all, investors want to know how much value you can add to your business with their investment.
The question of how much wealth each investment generates is a tricky one. If the goals aren’t achieved and the business doesn’t get headway, the next round of funding, which should be larger in principle, will be considerably harder to secure.
How strong is your pitch?
A great pitch is vital, but besides the enthusiasm, you can convey, the investor is curious to learn about the business opportunity and the stability of your firm.
There are entrepreneurs who aren’t great at presenting, babbling or filling in the blanks, but that doesn’t mean they don’t have a viable company plan.
However, there are exceptional marketers who entice investors with projects that are barely competitive.
A pitch is highly subjective, and while excellent communication and compassion are vital, it is also necessary to check that the business is feasible and has the potential to have a significant influence.
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