Jun 11, 2014

Dos And Don’ts Of Meeting With Potential Investors

When you’re in the very beginning stages of starting your small business, there’s nothing more exciting than just the idea of merely getting a meeting with someone who has even the vaguest interest in financially backing your company. It feels like if you can just get in front of these people, you can undoubtedly get them to believe in your vision as much as you do. They’ll be falling all over themselves to write you a huge check, if only you can get 10 minutes of their time! This (as we hope most of you know) is not how it goes. In reality, getting a pitch meeting with investors, while certainly being an accomplishment on its own, is actually nothing more than a chance to put yourself on display while a bunch of strangers look for reasons to not trust you. And there are a lot of things you can do to make that happen. Are you stressed? We don’t blame you. Breathe. We’ll walk you through this. You already know your company. You can point out the good things all day long. That’s not what you need to learn before your investor meetings. You need to learn what you should and should not do in these meetings.

Don’t be desperate

Investors are more interested in getting onboard a successful project on the rise than they are in being the life raft that saves your sinking ship. Creating a culture of excitement around your company – rather than desperation – should be your ultimate goal of any meeting with a possible investor. It’s at least (probably more so, to be honest) important than having a carefully constructed business plan and detailed figures.

Do know your plan inside and out

Your presentation should serve as a guide for the people you’re presenting to, not a crutch to help you remember what you want to say. Know your business plan so well that even if the computer dies and the power goes out and the world starts ending, you could huddle around a burning trash can fire with these investors and tell them every last detail about your product and your plan. Secondary Do: Include a Q&A section in your presentation. Let them hit you with questions. Make sure you know the answers.

Don’t be pushy

The first (and even the second and third) meeting with an investor is remarkably like a first date – you have to make them want to go home with you, which usually isn’t accomplished by pushing them to go home with you. Get investors excited about who you are, what your product is, and how solid your plan is. Tell them exactly what you want from this potential relationship, and leave it at that (for now.) They will respect the fact that you know what you’re doing, know what you want, are clear about expressing it, but are refraining from cajoling thing too forcefully as an expression of your understanding that they are in a position to take a risk and it’s a big decision. Again, it’s the perfect date mentality: Don’t hide the fact that you’re interested, but don’t scare them off by trying to get what you want too quickly.

Do practice your pitch

A good rule is to schedule your most promising investor meetings for the end of a meetings cycle. This gives you time to take your pitch out in the real world, and – no matter how much you practice alone or with your team – there are things you can only learn through actual meetings with possible investors. By the time you get to the most valuable potential investors, you’ll know more about what questions to expect from people, what areas of your pitch were initially weaker (and hopefully, have been improved), and will generally feel more comfortable navigating the pitching process.

Don’t over-promise

The temptation to make big promises to investors is very real, and very understandable. But it’s a rookie move that does nothing but set you up for a short-lived and unfulfilled relationship with any investor – if they don’t see through your over-promising initially and walk away, which is very likely.

Do focus more on strategy than projections

If there’s one thing that all smart investors know, it’s this: there is only so much you can know about the future. Their entire careers are based on assessing and taking risks, so it stands to reason that they spend a considerable amount of time thinking about how to foresee and mitigate losses. The fact is, there are too many variables in play to truly be able to project hard figures too far into the future. With that in mind, investors are endlessly more likely to bet on someone who pitches a really solid plan than they are to go with someone who walks in with shiny projection models that outline how rich everyone is going to end up. Your best bet isn’t to paint investors a picture of a glorious promised land – it’s to show them that you know exactly which road to take to get there.