Question

How would you describe yourself to an investor that you want to give money to your business

Answer 1

Looking for investors for your business is the entrepreneur's version of job interviews. You have to look the part and be able to say the right things when asked to earn capital from them. Investors come from all walks of life, and you have to be able to tailor your pitch to each of them to make your business more prominent to their interests.

Key Elements of an Investor Pitch:

1. Clearly Presenting Your Margins- Investors are not investing in your business simply because they believe in your vision (though they do have to believe in it to invest), they are investing in you to make a little bit of extra money as well. Having promising margins is going to be the best way to impress your investors, but having the numbers themselves is not everything. They have to be presented in a pleasing, professional manner as well.

2. Show Them Growth Potential- Investors like to see longevity and a stable marketplace full of consumers, so you should be able to show them the value of your business and how that value will only continue to grow. Explain how your business applies to a group of people and how much growth potential your brand has, both in terms of new markets and in revenue streams. Investors want to see that their money is going to keep working for them, so you should look to show them that your business can help them do that.

3. Have A Clear Business Model- Investors like things that they can work in as well, so having a clear and replicable business model is going to be one of the linchpins to getting an investor to sign on to your business. Ideally, your business model will be scalable and as detailed as possible, as investors are not looking for a static business, but one that will show lots of growth and has a good plan for how to achieve it.

4. Research & Homework- Do your homework on who you are pitching, the investments they have made and, if possible, find a personal relationship through mutual friends, school, hobby or geography. Investors not only need to like the idea, but also the people behind the idea, so don’t be all business and neglect the personal aspect of the pitch.

Typically during initial meetings, investors are asking themselves: “Do I like these people? Are they going to be easy (and fun) to work with? Are they creative? Are they smart? Are they confident but humble? Can they overcome adversity? Will they figure it out? Will they find and hire the right people? Have they ever done something like this before?”

Being knowledgeable about the market, space and players (without name dropping) shows your level of preparedness. Also, identifying what is not known but can be figured out is important.

5. Never Claim to Have Everything Figured Out- Investors know that not every question can or should be answered in the early stages. What they care about is how you take those questions, the questions you may respond with, and your thought process in exploring solutions. Be confident in your replies, but understand that sometimes the best answer is: “That’s a great question. I hadn’t thought about that. Let’s explore that idea further. I will add it to the consideration list.” Humility and honesty are two very important leadership qualities in the eyes of investors. A defensive attitude is not, so resist all urges to get defensive to probing questions.

6. Build and Sell the ‘A’ Team- Entrepreneurs often focus on their idea and the market opportunity first. They describe how their widget is better and smarter. But in reality, the entrepreneur is being sized up based on character, honesty, intellect and, more importantly, their team and their ability to attract ‘A’ players to their venture. I’ve heard more than a few times that investors will always bet on an ‘A+ Team’ with a ‘B Idea’ over an ‘A+ Idea’ and a ‘B Team,’ and it starts at the top. As such, early conversations should be weighted on who will be executing the idea, their skills and background, and why you will work well together.

7. Show Them How You Connect With Your Customers- Having repeat customers is a good sign of a successful business. In addition to this, having personal connections with customers through all avenues is always a good sign to a potential investor. Make sure that you cultivate positive relationships with your customers and that you can prove to potential investors that you have loyal fans that will always be there for your brand.