If you’ve ever watched the popular TV show Shark Tank, then you know just how complicated it can be to convince someone else to invest in your business. Getting turned down is a real possibility, and the best way to lessen your chances of rejection is to be well-prepared. Most investors will ask similar questions, and anticipating these questions can mean the difference between getting funding and walking away disappointed.
Presentation is Everything
Though it’s a cliché, presentation quality is truly important if you hope to win investors over. If you’re seeking investment in a physical product, create a prototype that is as close as possible to what you envision the finished product will be.
If you have moved past the prototype stage and already have a physical product, ensure that you bring a representative sample that is fully functional. This will not only allow you to properly demonstrate the key features of your product, but will also give potential investors a chance to see and feel the product for themselves.
For non-physical products such as mobile applications, it’s imperative that your presentation be dynamic and engaging. If you will be using a PowerPoint presentation, include eye-catching graphics and/or video as well as compelling wording. Avoid reading from the PowerPoint, as this will make you look as if you’re ill-prepared. This is your product, so you should have a thorough understanding of what it is and isn’t -- without relying on written material to get your point across. Investors are business people, so they are keenly aware of when something appears to be “off.”
Practice your presentation as much as possible before your initial meeting and, if possible, ask for feedback from others to help you work out any kinks. If you find yourself having trouble putting together an outstanding presentation on your own, seek professional assistance. The added expense will be well worth it, if it helps you get closer to gaining the interest of investors.
Numbers Don’t Lie
Prior to seeking investor capital, you should have solid numbers to present. If you have already started your business, investors will want to know annual sales numbers, how long it took to scale your business to that point, and any target projections you may have.
Potential investors will also want to know how much of your own money you have invested and whether there have been other investors prior to your current pitch. This will likely be an important factor in determining if they will move forward. If you have had previous investors that are no longer willing to work with you or provide capital, a new investor may question the viability of your company.
In addition to annual sales and profit numbers, there are other data that will be helpful in convincing investors that your product, service or idea is worth considering. Invest time and resources into focus groups, surveys and other means for gauging the expected consumer response.
Don’t be afraid to seek honest feedback, since this will only help you perfect your product or service before you take it to the boardroom. Though you may see this as an added expense, the information you gather will be useful to you as an owner as well as to potential investors. This will show investors that you are committed to making your product or service better -- and you don’t mind using some of your own money to do it.
Appeal to Their Human Side
When you approach investors, it’s important to realize that money is not the only thing to be gained from a potential deal. While it’s true that the investors have money, be mindful of the fact that an investor is a human first and a businessperson second. At the end of the day, no one likes to feel used, and if you do not appeal to the human side of an investor, this may be exactly how they feel.
Appealing to an investor’s human side is not as difficult as it may sound. Doing a bit of research on your investor’s background will almost certainly turn up some talking points for you to touch on during your pitch. Perhaps the investor has a background similar to yours, and briefly discussing this will help them view you differently. However, be sure to tread lightly and not get too personal during your pitch. A little goes a long way when it comes to personalizing your presentation.
If your investor is knowledgeable in the market that you hope to penetrate, be sure to let them know that you are aware of their accomplishments. Investors often are not only looking to put money into a company; they are also interested in paying it forward by helping someone who is in the position they were once in. Even if you don’t land the deal, building this rapport can provide you with an important connection for the future.
Both angel investors and venture capitalists care about each of these factors, and they weigh them heavily when deciding whether or to invest. The old adage goes “you never get a second chance to make a first impression,” and this is definitely true when it comes to pitching to investors.