2 min read How to Secure Investor Funding: A Guide to Your First Investor Meeting.
Preparing for your first investor meeting can be daunting. You have to consider what you need to prep, how to answer investor questions, how to pitch the deal, and more.
Preparing to Meet a Prospective Investor
In meeting with a prospective investor, come prepared to discuss the following:
Sales: ALWAYS have something to say about customer interactions. Even at the pre-revenue stage, you should talk about prospective customers and their reactions to your product idea.
Team: Talk about your team and how they are closing sales, generating leads, building product, and in general, how great they are.
Product: Talk about the customer’s ROI from the product, but don’t talk about how the product works in minute detail. Stay at the benefits level.
Fundraise: You should talk about how other investors are interested in your product idea and demonstrate your fundraise traction.
Also, ask questions of the investor such as:
- What do they invest in?
- What can they do for their investments beyond the check-writing?
- What advice do they have for you based on what they see so far?
- Who else do they recommend you talk to?
How to Answer Investor’s Questions
In raising funding, the startup will meet with many investors to answer their questions. So, how should the startup answer the investor’s questions?
Listen to the question and answer it directly and to the point. If the problem requires a number, then give that number. For example, if the investor asks how much revenue you have, answer with: “We have $200K of revenue so far this year”, or “We have $10K of monthly recurring revenue”.
Be careful with answering every question with a story, as this takes time and often misses the critical information. The investor usually has a list of questions to go through and a limited amount of time, and not responding with direct and to-the-point answers lengthens the process. Some investors may also interpret the long and winding response as avoiding the solution, which raises a red flag.
It’s best to be straight up.
How to Pitch the Deal to the Investor
In pitching your deal to an investor, it helps to know your investor first.
What type of investor are they- angel, family office, high net worth, or venture capital?
What is their investment thesis- are they swinging for the fences, or do they want to make a series of doubles and triples?
How much do they know about your market or application?
What angle would be best for this investor?
Should you focus on the market, the traction, or some other factor?
In your pitch, emphasize the appropriate return for that investor and explain how your deal compares to other deals they have had. Spend time describing the market and how your product fits into the landscape.
The best way to pitch an investor is to know something about them and adjust your pitch accordingly.
Raising Funding Is Hard
Lastly, raising a fund is hard.
A Few Points to Remember:
- Build relationships first and find investors second.
- Divide your raise into tranches and give yourself a reasonable timeline for each.
- Investors will critique the business.
- Consider your business as an operational machine.
- Perform as much diligence on the investor as they are performing on you.
- Get a sense of which way it is going with your deal and adjust your approach.
- Just as you tailor the sale to the customer, tailor your pitch to the investor.
- Adjust accordingly.
- Start meetings with those you know and give you real feedback.
- Use analogies to help investors understand your deal’s value.
Securing Investor Funding is a process; for every ten prospects, you’ll get 8 “Nos,” 1 maybe, and eventually 1 “Yes.” Keep going ‘til the money is in the bank.
Read more in the TEN Capital eGuide: https://tencapital.group/running-a-fundraise-campaign/
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group
