1. Know how much you need
Your finances are one of the most important elements of your business. Before you present your business plan to an investor, you will have to know how much funding you will need. For this, you will have to calculate what your investment need is. But understand that an investor is mainly interested in what you are going to do with their money. It’s not about whether you need 250.000 or 300.000 euro, but about the return on the investment (ROI) you can realize with it.
2. Find the right investor
Not every investor will be right for you and your company. Draw up a wish list in advance where you note down what you expect from your investor. For example, a business angel will be much more involved in the day-to-day business than a professional investment company. The phase of your company is also important, since not every investor is willing to invest in the start-up phase.
3. Write a killer email pitch
The pitches that investors encounter in their mailboxes are generally shocking. Too long, too unstructured, fluffy language and insufficient financial substantiation are common criticisms heard from investors. An email pitch is in many cases the first step towards a fun date, which should eventually lead to a relationship with your investor. So, make sure you maintain a good structure in your email, clearly explain what your company does and convey the message to the point.
4. Keep your pitch deck short and concise
According to a study of 200 pitch decks of start-ups by DocSend, investors spend an average of 3 minutes and 44 seconds reading. This shows that every second counts. Many investors prefer the ‘the fewer slides, the better’ concept. A good pitch deck should be simple, reflects the essence and has a maximum of twelve pages. An investor will look at the slides about the market, the competitors and especially the team first.
5. Convince with your live (or online) pitch
When you are invited to give a physical pitch for an investor, you have sparked their interest! Now you need to show the investor that you are a real entrepreneur; he or she will explicitly discuss what your motivation is, if you are up to the task and why he or she should entrust their money to you? In addition, he or she will see if you know what you are talking about, if you know the market and if you do not lose sight of reality.
6. Terms of the term sheet
Before closing the deal, you will first draw up a term sheet. This is a document that outlines the agreements to be made about the size of the investment, the equity or interest, and the control the investor will get. This is a very important document, so make sure you know the most important terms, so you will not be sitting at the negotiating table as an ignorant person.
7. Be due diligence ready
The pitch went well, the investor is interested. What to do now? In order to keep up the momentum in the process, it is wise to arrange a number of things in advance. During the due diligence – the research that an investor does on facts – an investor wants to turn your entire company inside out. The more documents you have ready, the faster you will receive an investment.
Want to learn more? Check out the event How2Finance from Oost NL!
Translated from the article “7 tips om funding op te halen voor je startup”. Read the original article here.
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