8 Lessons on Raising Capital for Your Business
Whether you are just starting your first business or your tenth, or you’ve been in business for years and are simply ready to grow, you will probably need to have a few investor meetings to raise capital at some point. Here are several tips I have learned over the years to make this process as painless as possible.
1. Don’t Get Stuck in Your Vision
This may seem counter-intuitive to other advice in this article. You DO wan to spend time getting laser-focused and building a strong vision, but you also need to be flexible. Potential investors, especially those with many years of experience, may have suggestions or requests that slightly change your original plan, but it’s most likely because they know what sells. Be willing to hear them out.
2. Make Every Pitch an Elevator Pitch
Even after you’ve been sitting comfortably in a conference room for an hour, or talking to them at length at a network event. When it comes time to pique their interest, do so in a 1-2 sentence pitch and wait for them to ask for details before diving in.
3. Investors Want a Laser Focus.
This is absolutely crucial. You should be able to explain EXACTLY what your business/service/product does in 1-2 sentences. If you cannot do this, then you need to go back to the drawing board. Investors will see a lack of clarity as a huge red flag, and will most likely be turned away. One strategy for developing this focus is to create a One Page Strategic Business Plan.
4. The Most Lucrative Investor Meetings May be Spontaneous
Know your plan and pitch inside and out. Be prepared to pivot, answer questions, and go into detail about any part of your pitch/plan at any time. You never know when you may meet a potential investor and not have your full presentation materials with you. But you will have precious little time to get them interested in sitting down to a meeting with you, so be prepared!
5. Wait to be Asked For Details.
It’s completely understandable to be passionate and excited about your plan, but don’t let that excitement become a rambling session of details that were never asked for. Practice your pitch and presentation with “broad strokes”, and then have a backup of details ready to be explained IF they are asked for. This will help reinforce the “laser focus” that investors will be looking for.
6. Never Say No to a Pitch Opportunity.
You may have a specific type of investor in mind, but you should never reject the opportunity to pitch to anyone. Even investors who you are sure are not a right fit will be excellent practice for you to pitch to those “high value” investors – so get as many in as you can!
7. Don’t be Afraid to Discuss Competition
There’s an almost 0% chance that your business idea is completely unique. Along with your market research, do a little research on your competitors and think of ways that your approach will be different. Caution: this is not the time to bad-mouth competitors or stuff in marketing slogans. Simply look for innovative ways to serve your customers and stand out from the crowd.
8. Make it Your Pitch/Plan Easily Repeatable
Chances are, you will not always be meeting with people who make the investment decisions, or at least they do not do so alone. Make your pitch easy for them to take back to the board or their bosses so they can sell your business to them.Remember: laser focus, broad strokes, straight-forward language. If you are using a presentation, make it short and provide a copy for the people you meet with to take with them.
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