The relationship between investor and entrepreneur is like any other: Trust, but verify. Speak and listen attentively. Look for chemistry and follow the intuition that tells you either to go for it or leave. Communicate your needs openly, but be willing to find a compromise. “An entrepreneur and an investor are equals. You bring the idea and work and the investor brings money. No one should feel tricked, “says Margareta Křížová, an experienced businesswoman, mentor and investor of time.
What should be my first steps in finding an investor?
I would recommend you make a list of investors whom you would like to contact. I would find out who the investor is, what investments he has made before and how he acted during the course of those investments. Sometimes it happens that someone has a bad reputation, but they are a nice person, and vice versa. I would talk to the people they invested in and ask them how it went.
Where can I find such people and information?
There are a number of sites, e.g., Forbes, Forbes Espresso, Forbes Next, Ihned, Czech Crunch, Lupa and Tyinternety. Besides you can also go through funds’ websites’, see investment portfolios, and then contact investors and funds directly. Probably not everyone will talk to you, but I would definitely try to find references. Investors do due-diligence on every business they want to invest in. Why should not you, too, know who your partner is? It’s not a partnership for only a week.
Let’s say I’ve already found several investors. How should I address them?
You can reach out to some by email; some you’ll meet informally. It is necessary to go to various events and conferences where investors are present. You can come to them and say, “Hello, I’d like to introduce you my business,” or “Can I send you an email?” While one will not reply to your email at all, another will write only once and then never again. Investors are strong personalities and it is not easy to communicate with them. But on the whole they are nice people who are interested in good business.
What if I contact the investor several times and they do not answer?
If someone says, “Send it to me, I’ll look at it,” and nothing happens after you’ve followed through, I would send a reminder email. If they still do not answer, I would do one more try, and then I would leave it. It happens to me that people write me and I forget to answer them. But when they remind me, I apologize and write back. If someone does not respond to the third message, one can assume that they are not interested.
I have a meeting invitation. How should I prepare?
You should have a polished presentation in which you should mention 1) what you sell, 2) to whom you want to sell it, 3) why someone should buy it, 4) how much you’re selling it for, 5) with whom you will do business, and 6) how you will get it on the market. You need to say everything in the simplest way. It is good to try pitching to someone who is not involved and will tell you if they understand it or not.
What should I be sure not to forget while preparing the pitch?
Do not forget to mention the amount, purpose, budget spending, shares and financial outlook. You should also have a clear idea about next steps when your business becomes successful. Many people are afraid that the business will not work out, but they don’t fear – because they don’t realize – that they will suddenly have to make more products, employ more people and acquire more money for the material. These are questions that investors want to know the answers to. It is necessary to prepare for them and to be bulletproof.
Do you have any tips for a good pitch?
It’s good to look at how others pitch. I would definitely go to see business presentations in incubators, demo days, business competitions, and similar events. In addition to presentations, you will also hear feedback and investors’ questions. There is no better way to prepare for your own presentation.
Many entrepreneurs are afraid that when they start talking about their idea, someone will steal it. What do you advise?
It is very individual and it is an art to be able to recognize when to say nothing or at least not too much. But I would certainly not say everything. People also often ask when they should start talking about a confidentiality agreement. Some investors do not sign one at all, others sign it at later stage. But I would not talk about it at the first meeting.
Curious to know whether chemistry between the entrepreneur and the investor is important or how to find out whether the investor is interested in your project? Read more on the blog of UP21the blog of UP21.