WHAT DO INVESTORS LOOK FOR BEFORE INVESTING?
Before we delve into the funding process, let us understand what investors are looking for before they invest. From the investor’s point of view, what are the investment conditions that motivate the investment?
- The Idea and its potential
The starting point is the idea and its potential. The idea must be practical, scalable, unique, and revolutionary, and must-have business opportunities.
Investors often concentrate on companies, including the reputation and reputation of the core team and their ability to produce the concept. The business model and sales model, along with your positioning, pricing, and cost structures, are equally significant.
- Future potential
Investors focus not only on the present but also on the prospects of the firm, which can be illustrated by a well-designed business plan that involves business plans, the use of capital, value proposition, and exit strategy.
- Return on investment
Along with all of these, the most important point investors are searching for is the return on investment. It is important that investors feel positive about the investment plan and are positive that they will be able to make a return on their investment.
WHAT ARE THE ESSENTIAL COMPONENTS OF YOUR PITCH?
Before approaching investors for funding, you must prepare your pitch.
- The main components of your pitch include a detailed 5-year strategic plan including investment offerings and expected valuations.
- In addition to the business plan, you must have a well-designed investor deck, which is a presentation of some 15 to 25 slides summarizing the business plan. The presentation of the investor comes in handy when you show it to the investors.
- The pitch also includes a well-crafted executive summary, also called a teaser summary. The overview is a two-page document summarizing the overall business strategy. Teaser documents are commonly used to facilitate structured contact with investors.
- You can also write an elevator pitch, which is a 5-minute verbal description of your business concept and strategy. It’s called an elevator pitch because you’re going to be able to pitch others over an elevator ride. Elevator pitch is really useful for investors when you encounter them at events or conferences.
You must spend adequate time and effort researching, creating, and preparing the components of the pitch before approaching the investors.
HOW TO APPROACH INVESTORS?
When you’ve got the pitch ready along with its elements, you should start getting closer to the investors. You will meet investors at start-up events or competitions. One may also proactively reach out to investors by sending them an email with a teaser document and a follow-up to a meeting. Using investment forums or mentors’ referrals to meet investors.
The fund-seeking method can be time-consuming, complex, and demanding. You have to realize that you’re going to face a lot of rejection, but you’re going to have to be relentless. Also, make sure you balance your time between looking for a fund and running your company because there is no question of financing without a running business.