Steps To Think Like An Investor To Stand Out From The Crowd, Pitch With Confidence, And Secure Fund Your Business/Organization.
No matter how socially conscious a company is, money is its essential lifeline. Startup investment enables businesses to expand and have a greater social effect by enabling them to recruit workers, buy equipment, conduct research, and develop novel product offers.
The main topic of this chapter is how to approach fundraising for your company or startup by adopting an investor’s mindset. Each journey begins with the first step.
Whether it’s a $20,000 investment from an angel investor or a $5,000,000 Series A offering, the first phase is to assess where you are today and where you want to go.
Prepare Like You Mean It
Obtaining funding is a continuous process. As an entreprenuer it is a continual process that is crucial to your job.
As a result, you must adequately prepare by expanding your understanding of the startup finance and venture capital investing industries.
You need to have a comprehensive understanding of the startup fundraising stages and the traits that investors look for in investee companies in order to acquire funds.
Asking for money before you can show that you are ready is one quick way to sour an investor relationship. Instead, you should approach investors with a request that demonstrates your understanding of their viewpoint.
Every investment a person makes will align with their personal objectives or driving forces, which range over a spectrum as wide as the variety of businesses that each founder chooses to create.
Once you know what drives an investor, you can show them how investing in your business will help you achieve those goals.
What an investor is thinking:
Deals to support social entrepreneurs that are ready to scale their impact are keeping me quite busy.
I don’t have time for businesspeople who obviously don’t fit inside the parameters of the investments I make or who nag me for information they can acquire online with ease.
Founders frequently worry that accepting outside funding may impair their decision-making and cause unpleasant disputes.
Although there is a risk associated with deep collaborations, investors and founders are equally concerned in finding partners that have similar objectives.
According to investor Sam Haffar, “When I do cut a check for a company, I’m certainly not doing so to serve [the company’s] interest, but rather because the company’s narrative is perfectly aligned with what our firm and I genuinely believe in.”
If you do the aforementioned actions, you’ll be ahead of many startups that prioritize number over quality when it comes to investor outreach.
It will be well worth the small amount of extra work to perform your study at the beginning, especially given the impact this relationship will have on the growth of your social venture.
Take your time to conceptualize and identify perfect investors.
Stand Out From The Crowd
Investors are constantly bombarded with pitches and meetings, making it hard for them to recall every detail.
To be successful, you must make a lasting impression during your initial touch points and continue to do so throughout the process.
It’s akin to a job interview where you aim to keep your organization at the top of the investor’s mind by the end of the day.
In the initial meetings, your goal is not to explain every detail about your business and operations but to simply stand out from the crowd.
When you leave a positive impression and clearly describe the potential opportunity from the investor’s perspective, they’re more likely to set up a follow-up meeting and learn more about your venture.
One effective way to stand out is by crafting a compelling and strategic story about your business.
Your personal experience, and likely your business, is unique and memorable, making it easier to tell a powerful story that captivates investors.
While storytelling is an art, it is also a learnable skill that can be honed over time.
Communicate a clear value proposition
A solid value proposition is the foundation of any compelling pitch. Investors are looking for unique ideas with proven traction that can be developed into sustainable ventures.
To stand out, you must clearly articulate what sets your product, service, or organization apart from similar offerings.
This means going beyond buzzwords like “value proposition” and “innovation” to explain how you are doing something cheaper, faster, or better than the competition.
For example, in the ed-tech space, there are dozens of e-learning products that all start to sound the same after a while.
To capture investors’ attention, you need to explain what makes your approach distinct and worthy of investment.
If you sound like everyone else, you risk being overlooked and missing out on startup capital.
Pitch With Confidence
You are now prepared to merge these ideas into an approachable manner after having thoroughly developed your company’s strategic story and distinctive value offer.
Y Combinator advises creating three “investment documents” for this purpose: the pitch, memo, and deck. The visual aid you employ to accompany your spoken pitch is the slide deck.
The secret is to stick to a straightforward plot arc while conveying the most crucial facts.
An investment memo, which is a concise written explanation of the firm and justification for investing in it, may also be appreciated by some investors.
In order to set the stage for your pitch deck and advance the conversation past the fundamentals, Y Combinator advises sending an investment memo before a meeting.
Finally, there is the actual pitch. This is the kind of pitch that may be given in a one-on-one meeting with a possible investor or live on stage at a pitching event, like these amazing social entrepreneurs did.
These resources will serve as a basis on which you can build as financing negotiations develop.
They are living documents that, like most things in entrepreneurship, will actively change over time as the team takes new choices and the business grows.
Know Your Key Business Metrics
Key company indicators will come up a lot in your talks with investors.
An investor will want to learn every detail about your company in order to decide whether to invest in it and to better direct the expansion and development of the enterprise.
If you’ve ever watched the reality television program Shark Tank, you already know that investors will anticipate you to be a whiz with statistics.
Your breakeven point, profitability, sales, gross margin, growth rates, revenue targets, risks, and other industry-specific data should all be topics you can discuss with assurance.
Embrace A Growth Mindset
Raising capital for your social venture may not have been part of your original vision as a social entrepreneur. However, it’s a crucial skill that many founders must acquire.
As with many duties in the life of a social entrepreneur, raising funds necessitates both humility and audacity.
You must balance the fact that your social venture offers investors a chance to invest their capital in new and meaningful ways with your own lack of experience and expertise.
A growth mindset towards fundraising can help you broaden your perspective and evolve as a social impact leader.
Not every fundraising pitch will go flawlessly. In fact, you’ll probably learn the most from the moments when you face challenges.
Close The Deal
You ought to be close to finalizing the agreement with your first (or newest) investor if you have been following the instructions in this manual to prepare, pitch, and learn.
Consider this phase of the trip as dating persistence: You’ve discovered “the one” and are prepared for marriage.
But before you can make it official, there are still several procedures (and paperwork) to do.
This is my volume two post on the Investor’s blogs. check the first one out here “What Investors Look For When Pitched To By A Company Or Individual”