Tired of sending email after email to investors and getting no reply? Sick of meeting with investors only to never hear from them again? Fed up with hearing, “You’ve got a great story, but it doesn’t fit for us right now”?
It doesn’t make sense, you say to yourself. You have a great business plan and you simply need some funding to take it to the next step. So why aren’t you getting the results you want?
Hate to break it to you, but you might be the reason.
It turns out that the quantitative aspects of your company are not the only factors that play a decision-making role in the eyes of an investor. The impression an entrepreneur gives off when meeting with investors and pitching their company has a huge impact that affects their ability to get funding.
So, here are some things to think about in order to make a good first impression:
- Be polite. Although this rule is common courtesy, it’s even more crucial when meeting an investor for the first time. Treat a potential investor with respect. If they say something you disagree with, don’t argue. Instead, understand where they are coming from and calmly articulate your opinion. If lenders see that you are not open to feedback or are stuck in your ways, this may foreshadow a difficult relationship down the line if they choose to invest in your company.
- Be humble. There’s nothing wrong with being confident in your product, business, and forecasts. Besides, if you aren’t your company’s biggest fan, then who will be? That said, there is a fine line between confidence and arrogance. This goes for both how you act and also your forecasted financial performance. Your numbers need to be accurate, rational and believable to start the foundation of your relationship on a positive note.
- Be likeable. This doesn’t mean you have to become everyone’s best friend or wine and dine them. Take the time to build a relationship as opposed to a transaction. Respect the fact that they took time out of their busy schedule to listen to your pitch and be sure to express that gratitude, as well. Be clear, calm, and show them that you are reliable and trustworthy.
Now, let’s assume you connected with the investor and that they truly understood your company and its values. They were showing interest and the potential for funding is there. Great! Now what? A follow-up is important to remind them who you are, what you are looking for, and to continue the relationship. After the initial introduction, the follow-up is what helps you stand out and can be the difference between whether you get funding or not. Consistent, well-timed followup messages allows for clear communication and shows the investor that you can deliver on your promises.
- Be transparent. If you’re asked to send your pitch deck or other documents, be certain you have clear, accurate numbers. Show your preparedness. Authenticity and honesty are crucial to fostering a long-term relationship.
- Be concise. Investors are busy people and go through hundreds of emails a day. Skip the fluff and get to the point in a short and simple way. Depending on the email, limit yourself to a few sentences if you can. No investor has the time or the energy to read an essay. The goal is to make it easy to read, compute and reply, while still getting your point across.
- Be conscientious. Be respectful of an investor’s time and don’t pester them with daily emails and phone calls. The process of getting funding takes time, so constant, unsolicited follow-ups will only ruin the relationship you’ve worked so hard to build. Put your investors on a mailing list and send out regular updates about your progress and other important developments. Detailed subject lines are also very helpful and often aren’t used correctly. Stating clearly what the email is about in the subject line adds to the transparency of the email and is useful for the investor who is scanning hundreds of emails a day. Follow some guidelines, such as pitching in 90 characters and including stats as another form of validation.
Investors have to believe in you just as much as they believe in your company and you have to work together. Sometimes you’re not compatible. If you know you’re a poor communicator or challenged with interpersonal skills, consider hiring a partner with that complement of skills.
Regardless of whether you are experienced at raising funds or just getting started, it doesn’t hurt to take a step back and re-evaluate the way you are approaching funding and talking to investors. The payoff may well be more resources for your startup.
Banknotes is an occasional column offering financial advice to startups.