Investor meetings must never be taken lightly. Following certain steps will ensure that the end result of the meeting is feasible. Meeting investors have to be a mutually beneficial gathering where both the parties see some value.
Once you have a meeting set up with an investor, what are the things that you must keep in mind to ensure that all will end well? What will give your business/proposition that oomph factor, given that these investors are likely to meet hundreds of Entrepreneurs with terrific ideas? A good handshake and great dressing can only take you so far. If you have a vague idea and no solid background information, chances are that the investors have already lost interest. While it is important to understand what not to do, what is even more important is how you can prepare yourself.
Investors/Venture Capitalists follow themes: Investments based on themes are nothing new, and it has become prevalent especially with the emergence of multiple industries and choices for investors and VCs. It is therefore crucial to understand the theme of the investor. It could be something as simple as ‘People do not want to die young’, or even how the ‘Chinese will spend more on frivolous things’. Once you know what makes the investor tick, it becomes easier to convince him/her of your plan. Make sure that you do your homework about the investors. Do your research beforehand and don’t waste time knocking on doors that won’t be a good match for your business. There is no point in taking an IT business to an investor who is only interested in Retail.
Do the math first: I’m sure that all of you have a fair idea of what is the right assessment of your business. Depending on how much the VC’s and investors are planning to fund, chances are that they will have a clearer idea of their expectations from the investment. Ensure that you set a realistic and defensible valuation of your venture and have an idea of it. It is always a good idea to go in with your own idea of what’s a reasonable split. This will help you in ultimately gauging if the deal is viable.
Don’t shy away from discussing past failures: You might feel that discussing failures may not go well with the VC’s, however, it would have the exact opposite effect. An experienced investor knows that as cliché as it may sound, “Failure is the stepping stone to success”. Go in there wholly prepared to discuss prior failures, and what your learning was from them. Chances are that an experienced investor would have done his homework already and would even question you on this. Your ability to stand up and talk about it showcases your ability in piloting from a rough situation and withstanding the pressure. So be upfront and use it to your advantage.
What you need the money for: Investors want to clearly understand if the money you are asking for is sufficient for your objective to be met. If they see through that the objectives cannot be met with the investment that you are seeking, then they may not show interest. Also, ensure that you are not looking at increasing your inventory and procuring a big office. These are secondary. So a clear cut plan of where the money is going may help you bag the investment. Typical venture capitalists only invest in 0.5% – 2.0% of the deals they see, so mapping out what you want to do with the investor’s money may mean that you might get a chance to be a part of that under 2 percent of the entrepreneurs.
An investor meeting will seem like a daunting experience, but walking into that meeting room fully prepared not only increases your chances of bagging an investment, but also ensures that you can walk out of the room with the knowledge that you have left a good impression.