Whether you’re just starting a new business or are preparing to scale your existing company to get to the next level, it’s common to seek out potential investors to provide the capital your company needs to take flight. Unfortunately, most founders can’t just make an appearance on Shark Tank and get top deep pocketed investors immersed in bidding wars over funding their companies. However, there are some practical things you can do to maximize your chances of landing the investment capital your business needs.
1. Present Clear Numbers
When talking with investors, you need to come prepared with detailed numbers about your business. If you’ve just started a company, you should understand and be prepared to demonstrate exactly how much cash you have and what you’ll need for all expenses on the foreseeable horizon. If your business is more established, provide potential investors with your financial statements (which you need to make sure are 100% accurate). Most investors are willing to sign a non-disclosure agreement before being able to look under the hood at your company’s finances.
2. Explain the Solution to a Problem that Your Business Provides
Investors will want to intricately understand what your business does and what it plans to do in the future. Giving them a detailed outline of the solution to a problem that your business can provide will help shed light on the investment opportunity. Investors are more likely to get on board if you can articulate a relatable problem and how your business is going to solve it.
3. Walk Them Through Exactly How You Will Use the Money
Investors want to feel very comfortable that your business is going to use their money wisely. Come to any investor meeting with written information that shows exactly how you will be utilizing the investment proceeds and why you believe your strategy presents the best path to your company’s growth and a solid return to the investors.
4. Feature Your Team
Ultimately, investors buy into people they believe can execute — they don’t just buy into ideas or products. Your team is everything. It’s either your company’s biggest asset or its biggest liability. Plus, investors want to meet and get to know not just you, but the other members of your team that they’re effectively buying into. So be sure to showcase the key individuals that are going to be integral to the execution of you company’s plan and vision. Make sure the team is prepped and well equipped to shine before they’re introduced to potential investors.
5. Be Ready to Negotiate a Deal
Be ready to negotiate your deal before, during and after your presentations and meetings with investors. Know what your bottom line is and if it’s reasonably attainable as you begin to negotiate, lock it down and make it happen. Nothing is more off-putting to investors than founders looking for a perfect deal or who are indecisive. You need to be decisive in your business and good investors look for that trait in the founders they’re willing to get behind. The more you’ve planned ahead and have considered the various scenarios under which you will or won’t do a deal will pay serious dividends for you when it’s time to negotiate the particulars of the deal terms.
At Linden Law Partners we’ve helped hundreds of businesses and investors in preparing for, structuring, negotiating, and closing investment transactions of virtually all types and sizes. Please contact us to discuss how we can help.