For any startup trying to find investors, one of the best ways to go about it is putting yourself in the shoes of the investors. How?
Similar to how we get to know our customers, we also have to know our potential investors’ desires and fears. Think about what they’d look for in a perfect investment.
With experience and insights coming from countless investor pitches, here’s a rundown on the 3 MISTAKES you should avoid when trying to raise investments:
MISTAKE #1: BEING IN A HURRY
When looking for investors, first impressions do matter - especially when you’ll ask them to support your vision with their resources. So having a product that’s 20-30% done just won’t do. This gives your potential investors plenty of room to doubt if this will even push through.
Give them confidence that you have a solid plan, with timelines and initiatives to get your tech fully developed, and ready for the market.
Don’t come into a pitch without a prototype and demo ready!
MISTAKE #2: NOT UNDERSTANDING THE PSYCHE OF THE INVESTOR
It may seem a bit basic, but you’d be surprised as to how many startups forget to “put the investors’ shoes on”, and it really shows when pitch day arrives.
Once we tie those laces, we realize they operate on 2 things:
1. The Aspiration to make profit from the investment
2. The Fear of losing money
Most seasoned investors have lost money at one point, so it’s best to never underestimate the measures they’ve put up to make sure that doesn’t happen again. These measures come in the form of detailed criteria to minimize losses and allocate their money where there’s the highest chance of earning profit. And nothing says “profitable” more than a startup with:
1. A working prototype
2. Some traction in the market
3. Partnerships and alliances
By learning their criteria and preparing for it, you’ll be on your way to a rejection-proof investment pitch!
MISTAKE #3: THE LACK OF CONFIDENCE AND ACCOUNTABILITY
If an investor asks “When will your product be ready?” what would you say?
*MENTOR’S TIP: Never answer, “It depends on the tech”, or “It depends on when the developer will finish.”
One of the things investors really don’t like is the LACK OF ACCOUNTABILITY. When speaking with them, make sure there’s a concrete plan. Ofcourse, we don’t want to overcommit. But not being able to confidently answer these questions is a sure sign that there’s more preparation to be done.
Show your investors that you’re a MAKE IT HAPPEN entrepreneur and not just someone who waits for things to happen. Remember, to get someone to invest in you, you have to show that you’re investing in yourself and your vision, too.
Having worked with more than a thousand clients for over a decade, I’ve come to realize the BIG difference between those startups who make it, and those who don’t.
The creators’ skills definitely had something to do with it, of course. But one of the most vital things is WHO they have in mind from the development stages to the launching.
A memorable example here is when I met a talented creator who had this amazing product in the works, but was in a bit of a rush to meet with investors. So he had a meeting set, and asked me to accompany him. 10 minutes in the meeting, the investor went from excited to exhausted real fast, knowing that he’d be risking too much with what this creator was presenting.
WHAT WENT WRONG? It’s that he was talking from the INSIDE OUT, instead of the OUTSIDE IN. What’s the difference?
The creator was only focused on the INSIDES of the product. He was talking too much about himself, his skills, his experience, the clever tech, codes, and databases he used. He was attached to the technicalities of his creation, that he didn’t get to explain who it was for.
*MENTOR’S TIP: What investors want to hear on the get-go is HOW IT WILL SELL.
One of my recent clients who got the investor’s deal on the spot prepared and presented all the right things. He explained who to sell the product to, why people should buy it, and where to sell it! Here’s a quick rundown on the 3 Points THAT GET INVESTORS INTERESTED:
1. The MARKET GAP - The Ideal Customer & The Unique Benefit
From the very beginning of product conceptualization, The Ideal Customer should be in mind, answering a current need that hasn’t been met yet. Focus on the Unique Benefit. Otherwise, what’s the use of your invention?
2. The POTENTIAL - Industries & Geographies
Which industries they can sell the product to, and how they can position their product to flexibly fit the needs of several industries and cultures. This shows the investor the strong potential of the product evolving.
3. The DEVELOPMENT - Marketing Initiatives & Tests
Besides giving investors an idea of how marketable the product is, they also want to see if you have the initiative to have a real audience that experienced your product before meeting with them. This shows them that you are continuously developing and upgrading.
Just remember, in order to be successful in just about anything, don’t just focus on yourself. Focus on how you can help others, too! I hope this gives you an idea of how to ace an investors meeting!