A new company seeking funding from investors won’t get very far without the perfect pitch. A pitch must include the cold hard facts of your business and how the investor funds will be usefully allocated, but it also requires personality and points of intrigue. When deciding to begin raising capital consider this, venture capital firms have invested over $4 billion dollars in over 1,000 start ups in 2012; similarly, angel investors invested over $20 billion to start ups. These figures show venture capital firms are willing to invest and you have a chance to gain the much needed cash for your new venture.
Here are six tips for talking to investors on raising capital:
- No cold calls. Use your networking skills. Get the word out about your business by attending conferences, using social media, etc. Most investors are more apt to lend to those who are introduced to them by a trusted source or credible referral.
- Talk about market need for your business idea, not market size. A large market for your idea or product does not guarantee your product or service will meet success. A pitch directed toward the idea of getting a slice of the pie is not sufficient enough to engage an investor. An investor wants to see the uniqueness of a product or service, also a long term growth goal oriented mindset for success. You should have a deep familiarity with current trends, market dynamics, buying behavior, and buyer motivation, especially in a situation in which your product or service is entering a huge market.
- Acknowledge your competitors. Investors like to see you have competition for your product or service. This shows investors your idea is marketable. Since you will not have solid evidence or reports that show your particular business growth yet, it is important for investors to be able to compare your competitors growth and realize your potential.
- Pinpoint where your investors fit in your business plan. Lay out where the investor’s funds will be applied for your start up. Have reports or breakdowns displaying what you need and how much you need to really get your business going.
- Practice makes perfect. We are all not born pitch producers. It takes time and practice to perfect your pitch. You want your proposal to be quick, to the point, and precise, but also include a little heart. Making a pitch a bit personal is not a sin, in fact it is engaging and helps the investor know where you are coming from. Remember, they were in your position at one time.
- Lastly, talk to them about your organizational risks. Risk management is more visible than ever. Let them know that your organization has identified the critical risks it is exposed to and share your controls for managing those risks.
Venture capitalist investment can help you realize your dreams and get your budding company off the ground. Through the TechAssure Association member, there are here to help protect innovative firms. Just because your firm may be taking a risk on a new business, doesn’t mean you can’t be protected, please contact a TechAssure member for more information on how to keep your investment safe.