A survey by Your Story reported that the year 2017 recorded $13.7 billion being invested in the Indian start-up ecosystem. The value and the number of investors will increase in the coming years but this time the investors are using the capital more cautiously and focusing on those start-ups with long-term goals.
In this scenario, the entrepreneurs need to focus on those investors who are really interested in funding and scaling their business. To convince someone to fund your dreams, you have tounderstand theirs as well. Getting an appointment is also not easy. So, when you get one keep in mind the following five points before connecting or approaching the investors:
Make a proper strategic plan:
Don't start approaching any investor before planning or ideating your business strategy. You need to have an idea and a plan to execute it. Get a rough idea, how you will make money and deal with other expenses. Meeting an investor is like selling a product instead you are selling an idea. So, put your best foot forward. Make some logistics data and gross margins, this will help your investors to understand your plan better. You should also know the key components like target market, market size and growth, the present competition in the market, customer profile, your product's plan and how will you go about it, your key targets after six months, twelve months or eighteen months.
Research, research, and research:
Before approachingthe investors, you need to find out everything about them. Who are they? Their lifestyle, businesses they owned, their interest and other valuable information. It is good to do know your investors before any meeting. Try to know their purpose or what motivates or inspire them the most. After knowing about them, you can plan your presentation accordingly.
Be transparent in front of the investors:
Investors will be funding you with capital. It is obvious that they would like to know you and your business plan. You have to make that easy for them by drafting and explaining your plan more clearly and telling the vision and mission of your start-up. Provide them all the important information including your financial statements and tell them about your organization and the members who are involved. Be clear about your expenditures and the ways to meet them. Show them how you have managed your organisation. Mark all the points before meeting your investors.
Make a list of FAQs (Frequently Asked Questions) and practice it with your team:
You might think this is the easiest part but no, it is one of the underrated points when one prepares to meet an investor. Make as difficult FAQs as possible. This will give you a rough idea and confidence as well in front of the investors. Before raising the financial deal, let them ask the FAQs this might impress some of the investors. Many small and big scale industries prepare FAQs and it is a part of their meeting preparation.
Make a set of key milestones:
It is a part of your strategic planning. Before you go to an investor, make sure you are confident about your approach. Tell them your significant goals and the time period in which you will be able to achieve it. Investors will judge you; by the way, you present, prepare and make future plans about your start-up. They would be interested in knowing, how far you have arrived... Where do you want to go? What are your next bigger projects and how will you execute them? To answer all these questions, you need to set some key milestones. Also, keep in mind, your milestones should be real and reduce risks.