Obtaining the necessary financing to start a business is a challenge for many entrepreneurs. In fact, for many startups, not getting funds for their project represents a sentence to failure. 13% of startups mention that the fact of not getting investors is one of the main reasons why their business can go down. Most entrepreneurs are not clear about what investors measure or evaluate. In addition, they still do not know how to present a project in an attractive way for their potential investors.
As we know the importance of this topic for entrepreneurs, in this article we present the elements that you must take into account to win the investment of your startup. Bringing you 5 amazing tips that you cannot lose sight of to attract new investors to your company.
Know Your Investor
Before preparing the best presentation speech, which is also important, it is necessary for entrepreneurs to become familiar with the person or group of people who will listen to said presentation. There is no worse mistake for entrepreneurs in search of financing, than presenting themselves to their future investors without having previously studied them.
Therefore, before that important day for the future of your business arrives, you should ask yourself the following questions about potential investors: Do they know your industry? Have they made any other investment in your industry? Novice or experienced investors? Do they belong to a network of business angels or are they independent investors? What companies did they start or were they in before becoming investors?
Answering these questions will help you better understand your potential investors and thus present yourself with greater confidence.
Likewise, knowing that investors are attracted to one or another startup according to the sector in which it operates and its progress in legal procedures. For example, having a constituted legal entity, having a bank account and shareholders agreement, having the advice of lawyers and accountants, in addition to having initiated the processes for trademark registration; They are usually processes that, if they are already advanced, will offer an additional attraction for investors.
Present Important Digits
Investors usually want to know the growth potential of the company, the capital it will need in the future, the size of the market, as well as actual or potential competitors, and all this will be more attractive to them when the information is presented in numbers.
In addition, it is important that the reasoning behind the numbers is highlighted. Sharing data in the presentation will build confidence in your decision to invest.
Within this specific tip, there are 3 extremely important pieces of data to point out, these three numerical data cannot be missing in your presentation or proposal that you are going to present to your investor of interest. The first of these is the cost of structure or burn rate, that is, how much does the monthly expense represent in salaries, work space and other operating expenses. The second is the cost of customer acquisition and, finally, the value of the useful life of the customer, or lifetime value.
If it is possible to demonstrate that the lifetime value of the client is greater than the cost of acquisition, investors will have greater interest in the startup.
Put Effort Into Your Proposal
A good way to assess how clear a business pitch can be is to do a 3-minute presentation. In these 3 minutes the entrepreneur must be able to explain what the startup is and what it does.
After you find your niche, presentation model and the clear wording to provide your plans and exhibit your proper ideas, entrepreneurs must be very careful with the follow-up of the project, since the following 48 hours are crucial to present the company's business plan and continue the process towards financing.
Keep Your Startup In The Market
Selling a product if it is not placed on the market is practically impossible. In the same way, the formal or informal meeting instances for startups are the only places where startup owners can acquire opportunities and experiences to sell their idea.
Know What Investors You’re Looking For
When entrepreneurs are in search of financing, they must be aware of its modalities and what each of them implies in terms of percentage of shares, participation and initial or subsequent mechanisms of the negotiation with the investor.
There are angel investors, accelerators and venture capitals, each with different agendas and expectations, and it is important to know the differences
According to experts, angel investors, either individually or in a group; they invest their own money, provide their time, contacts and experience in certain areas that are related to them. In the case of venture capitals, they invest money from other people and institutions. For them it is important that if the project prospers, they can continue investing.
One of the main challenges is that entrepreneurs manage to conquer their markets, support operations and obtain financing. You'll notice the difference by putting these tips into practice before you present to potential investors.
