Think about it: if there are many young people today who are revolutionizing the market and displacing large companies, there are also people interested in investing money in these people. But make no mistake: the competition is getting stronger and you must prepare properly before you go around asking for contributions to your business.
To help anyone thinking about knocking on an investor’s door, we have organized a guide with the help of the entrepreneur and an expert on the subject. Your investor can be anywhere but you have to find them and if you maintain some strategic plan, you can find your investor for sure.
We are going to discuss a few strategies and this process could be divided into five stages: Preparation, Choice of the investment model, Presentation, Explanation, and Negotiation. Obviously, not all of them are always present in the search for an investment or are presented simultaneously in practice, but the steps below can be a good reference.
It is the beginning of the path when you define your business, the area of operation, the market, and the size of the investment that will be needed. A business plan is essential to gather this information and you can find a model on various websites. With this step well accomplished, you will know what you need, and convincing the investor will be a more feasible task. Imagine yourself on the other side of the table and answer: would you put money into a business that even those responsible do not know what it is about?
2. Choice of Investment Mode
Once the business plan has been defined, try to fit it in front of the investment opportunities offered in the market. In general, we can highlight three: Angel investor: individuals who have some capital saved and are willing to invest it in businesses that can grow. It can be anything from a successful friend of your father to entrepreneurs willing to help you in the venture. It is usually a group of people looking for businesses that can yield well. Some of them have an idea and they are looking for people who will invest in the business. There is still a romantic side, of passion, to see small companies burst into the market with the allocated investment. This is the choice of those who really know what they want and are prepared to get there. It is a legal entity that brings together a group of investors with the objective of obtaining financial gains from the acquisition of an investment portfolio.
It is time that you will pitch your proposal to your investor. Investors often say that the entrepreneur must be able to convince them in 5 minutes of conversation. To facilitate this, you need to set up a presentation with 5 slides or points. For example,
1. What the company is and what it is for;
2. What is the business model (how will you make money from that company),
3. What is the size of the market and people reached (essential to show the potential of the business),
4. To reach this market, what you need (infrastructure and the corresponding amount and presentation of investment values)
5. How the business will work (inflow and outflow of money, including from the investor, and projected goals).
If the investor likes what he saw in the presentation, he will call you for a more detailed conversation. Therefore, prepare yourself for a battery of questions, as all possible questions about that activity will arise. Try to show confidence, but do not appear arrogant if you are facing something that has not yet been thought of for this business.
Questions answered the investor seems to be convinced that this is a good opportunity for him to put his money. But be calm, the most delicate time has come: the negotiation of the contract model, the values and periodicity of withdrawal, etc. Probably both parties will have to give in to an agreement. It is up to you to evaluate whether it is worth accepting the counter-proposal or looking for a new investor for the business.
If you are really starting a business but you don’t have funds, you have to pitch your business idea to the right investors. But to be successful, you must maintain a strategy that will convince the investors. So, you can move forward with the strategy that we have discussed or you may make your own plan to find your desired investor.