You’ve created a unique product or service. You’ve conducted market research, developed comprehensive strategies, and flushed out every aspect of your business plan. Now the time has come to approach investors with the hopes of generating early stage capital to propel your venture forward. These initial meetings can be a bit nerve-racking, and understandably so.
Here, IDEA: Northeastern University’s Venture Accelerator offers five tips for successfully raising early seed capital:
1. Target relevant investors
Identify the investors that are the best fit for your business. Be sure that any investors you approach are interested in investing in new businesses like yours and with the amounts you’re looking for. Specifically, one great way to meet angel investors is through the entrepreneurs they’ve already funded within your industry.
2. Do your homework!
Once you’ve identified potential investors, learn what they look for. Are they most interested in you and your team, or are they looking for an in-depth analysis of your business plan? Is a prototype enough, or do they typically hold off until seeing hard numbers regarding user acquisition? What types of companies have they funded in the past? How have these companies done? These questions, among others, are important to address before meeting with any investors.
3. Center your pitch around a story
One strategy to use when developing your pitch is to structure the presentation around a story. For example, perhaps you or someone you knew had a need that was not met with any existing product or service on the market. Explain how this led to the creation of your venture. Beginning with an anecdote may help ease you and the audience into your presentation far more naturally than jumping right into market research findings or financial figures.
4. Make your commitment clear
Make it evident from the start that your venture is something you’re extremely passionate about. But, be cautious so as to avoid appearing blindly or naïvely optimistic. Make it clear that you and your team have done the research and put in the work, and will continue to do so. Investors will be more confident and willing to work with you if it is clear that you and your team are ready to continue with 100% effort.
5. Be coachable
A great investor can also prove to be a great mentor. Many investors, especially when working with early stage ventures, are ready and willing to offer their constructive criticism, as well as any concerns they may have. Have the confidence in your venture to be receptive to feedback. Listen carefully to any questions they may raise, and address these with respect and a thorough response. In doing so, you will make it clear to the investor that, should they choose to invest, your team will be receptive down the road to any additional feedback, resulting in a mutually beneficial partnership for both your team and theirs.
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