What Are the Four Things an Entrepreneur Should Do Before Meeting an Investor?

All start-up businesses, no matter their location, will face the same problems, and the majority of them believe that an investor will help resolve. Luckily, in this blog we’ll be looking at the four things you should do to ensure that the investors have the correct opinion about you and your business.

  1. What’s your story?

This isn’t about the product or service you’re trying to sell – this is about you and your team. This is how you managed to get to this particular point with your business. The investors will want to know more about your background and the product/service you’ve created. They want to know about any previous experience that is relevant to this business to make them want to invest. To get the best possible results, you must show passion.

The investors aren’t just investing in the business, but the person driving the business themselves. You might have a great business idea, but if you’re not the correct person to drive the business forward, the investor will lose interest as they want someone with hunger and passion for success.

You must know your story. If you think you know it, practice it, over and over again. Be ready to tell them about you and your company, and what you have achieved in such a short period of time.

  1. Know your split

Each entrepreneur will have different opinions on what is an appropriate amount of equity to offer the investors. Investors will want a different amount of equity dependent on how much money needs to be invested, the higher the amount, the more equity the investor may want. Whatever the case, it’s best to go in with what you think to be a reasonable split, but be careful not to give away too much as it could diminish your incentive to work.

Just make sure you do the math, whether it be 5% of £20,000 or 16% of £250,000, make sure that you’ve run the numbers and see whether the deal makes sense.

  1. What’s the money for?

It’s important to map out a plan on what you’re going to do with the investors’ money. It doesn’t have to be concrete, however, you can change it later as start-up businesses are in a constantly changing environment. But try and galvanize your idea to make them want to invest, if you’re going to hire more people or buy more space to advance and expand, say it.

While the investors may not agree entirely with the plans you’ve laid out, they appreciate someone who knows what his/her next steps should be, instead of just believing that investment is the next step.

  1. Don’t overpromise

The potential investors are obviously going to ask a lot of questions, (they’re about to invest a lot of money, why wouldn’t they?) but the key is to be completely honest with them. They will understand that as a new/young company, there’s a lot of things to figure out, so don’t lie to them, or cover up any uncertainty or overpromise.

It’s good to show that you are able to recognise your companies limits or unforeseen changes, as it indicates to the investor you are able to look at it through a realistic lens.

Hopefully, these tips are just the beginning for you acquiring an investor. You’ve done everything right up until now, just don’t let the lack of preparation throw you out of the game. If you keep practicing you are sure to achieve what you want.

July 15, 2018

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