Starting any new venture is tough and an early-stage start-up is no different. Convincing people where to invest their hard earned money is no easy task. Here are some quick lessons we’ve learned along the way.
1. Do Your Research
Know your business plan and the space you’re entering cold. Some investors may want the 30,000 foot view, while others may want you you to boil it down to what fits on the back of an envelope. Be prepared for these scenarios and everything in between.
2. Practice Your Pitch and Get Better At It
Practice. Practice. Practice. Pitch your partners or others you trust. You can learn as much, if not more, from failed pitches then from successful ones. Do postmortems on all of them. Don’t be afraid to go back to the people who said no and ask why. They will probably have some good advice to help you improve for your next pitch.
3. Defend Your Decisions
Investors will ask hard questions and almost nothing being off-limits. This relates to point #1, but be ready for anything and be able to confidently defend your business plan, monetization projections, expenditures, development process, business structure, deal structure, and the team behind the business.
4. Know Your Audience
Different investors will want different information based on their background. A “friends and family” investor pitch might not go the way you envisioned if they have professional experience investing.
5. Turn Down the Wrong Money
Don’t be afraid to say no. Some investors may want more than you’re willing to give up in exchange for their money or their investment goals may not align with your company vision. Don’t take money just because it’s offered, especially if you have doubts about the conditions. Find people who believe in you and what you’re doing and want to back exactly that.
6. Communicate Your Passion
Investors need to feel comfortable with you, your team, and your vision. Make them believe in you. Don’t let them turn you down because you can’t sell yourself. In the early stage, people are investing in you, your vision, and your passion as much as, if not more than, your product.
7. Get Ready to Hurry Up and Wait.
Everything takes longer than you think it will. Be prepared to wait. The overnight success is extremely rare, if it exists at all. As previously mentioned, convincing people to invest their money with you can be difficult. People, understandably, can take a long time to make decision.
8. Set Deadlines For Everything
Your project has its deadlines and so should your investors. If potential investors are taking too long, don’t hesitate in sending a follow-up email or phone call asking them for an answer by a given date. Any answer is better than not knowing. And a no now allows you to reformulate your strategy to make the next answer a yes.
I hope you’ve found this advice helpful. I know we have on our way to funding our goal.