In recent years, sites like Kickstarter have gained increasing popularity as they have allowed artists, activists, non profits, and others to gain access to funds and support. Entrepreneur points out that, in addition, to the financial benefits, crowdfunding sites allow individuals with strategic connections to offer their assistance. Drawing in these sorts of individuals can vastly benefit a business, but it can also be challenging. Bearing in mind these tips can help improve your chances of success.
Clearly State the Purpose of Your Business
Getting strategic investors first requires that you let them know precisely what your business is about. This is more than just your tagline or your mission statement. You need to summarize what your business is focused on, what it offers, and what the target market is. Try to accomplish this in less than 250 words to allow for a succinct elevator style pitch. If you’re going to be giving this speech in person, practice until you’re comfortable with it. If you want to be particularly prepared, have friends question you while you’re giving it so that you can practice responding to concerns and then getting back on track.
Have the Technicals and Logistics Worked Out
Running a successful business comes with a number of technical and logistical tasks. From making sure your product is ready to hit the shelves to handling credit card processing in online transactions, you should have as much of this worked out as possible, major platforms like Shopify can help you easily streamline the entire process. This way if the investors have questions about how you will run the business, you can answer them with authority.
Most successful business plans include this sort of information. You can submit the full business plan or a modified one to potential investors to show them how thorough your business preparation is. Even if you only plan on approaching a few people and they don’t request this information, having a thorough business plan with the more technical aspects handled will benefit you. Most banks require this if you request a loan. Having it prepared in advance will save you time later on.
Look at It From Their Perspective
The Association of Chartered Certified Accountants reports that investor concerns are significantly different from what they were even ten years ago. When gathering information for your proposal, make sure that it is current. Also make sure that you take into account the investors’:
- experience within the industry
- obligations within the industry
What you should pay attention to in particular are the points where the investors will be most concerned or where it may conflict with their goals. If, for instance, you want an investor who has key connections within the industry, for instance, one of the chief concerns is likely to be their continued reputation. Modify your pitch to apply to each individual or group you present it to. If you know the specific individuals to whom you’ll be pitching, you can even research them. If you find out, for instance, that one of your potential investors is interested in a particular charity and your business volunteers with or benefits that charity in some way, make sure to mention it.
Make Sure You Are Specific About What You Want
Strategic investors offer more than just money. Reputation, security, advice, and connections are just a few of the possibilities. When you come to the table, make it clear what you’re looking for. Most people are used to being asked for money, and they may shut you down right away. Letting them know precisely what you want upfront can help you get on the right page sooner.
You should also be specific about what the investor’s liability will be. Some investors may supply funds or connections whereas others may become full fledged partners or limited partners. Each level of involvement has different pros and cons, but you must be specific about what’s expected. Ownership of the business and the impact that investors will have on the business’s day to day operations will also have to be determined. These sorts of details should not be ignored. Ideally, all of your expectations should be put into writing so that there is clarity and a physical document to reference.
Drawing in strategic investors can be challenging. They offer far more than just money, but they can also be challenging to find. You need to make sure your purpose is clear and your business is in order. You also need to look at it from the investor’s perspective to craft the most persuasive pitch, and you will need to be specific about what you want. By remembering these things, you increase the likelihood that you get the investors you want and need.