How to meet with investors

Amal_Warda · July 20, 2022, 9:34am

How to meet with investors? Attend networking events in your area if you’re considering a new business opportunity that will require an investment to meet other entrepreneurs and identify influential members of the investor community. To increase the visibility of you and your company among investors and entrepreneurs, participate in events, meetings, dinners, and speaker series.

How to meet with investors?

Networking as a way to meet and engage investors

Attend networking events in your area if you’re considering a new business opportunity that will require an investment to meet other entrepreneurs and identify influential members of the investor community.

But it is never too early to reach out to potential investors and it might be simpler to establish a casual rapport if you aren’t actively looking for funding for your startup.

When extending your network, use creativity. To increase the visibility of you and your company among investors and entrepreneurs, participate in events, meetings, dinners, and speaker series.

What is an investor meeting?

A venture capitalist or angel investor is invited to an investor meeting where you can pitch your business concept to secure their financial support. The success of startups is increasingly dependent on these meetings:

Tens of thousands of small businesses receive funding each year from investors who believe in their potential. According to venture capitalists and angel investors, respectively, 16,000 and 600 firms are funded annually by them, according to angel investor Basil Peters’ Angel Blog.

Additionally, you should anticipate holding frequent meetings with your investors even after you’ve received your investment. These discussions often center on your company’s operations, future goals and projections, and the use of capital that has been invested.

Hoover, for the sake of this essay, we’ll concentrate on the first meeting you had to get your funding.

Get an introduction to potential investors

When you are prepared to raise capital and have created a list of potential investors, get in touch with them directly. Get the greatest introduction you can from different sources for the investors you do not know:

CEOs and founders of invested companies, both present, and past: They can be a great way to get your business a referral to that investor, and they can provide some insight into whether the investor would be a good candidate for your business. They are typically easier to contact directly than an investor.
Additional investors with familiarity and experience with the target company
Additional relationships in the industry sector, including analysts, directors of powerful institutions, and consultants
Professional businesses, such as law firms, accounting firms, and consulting businesses
Your friends, neighbors, and relatives
Using LinkedIn or other social networking sites, ascertain whether you and your prospective investor have any indirect connections and ask for an introduction.

Connecting with investors

Send an email request to meet with an investor because it is quick and simple to circulate within an investment firm or angel network. A persuasive elevator pitch outlining who you are and what you do should be included in your email to the investor.

Include a copy of your executive summary, which includes information about the team, market, and technology, in the email. Investors desire the chance to examine some preliminary data about a company.

Using this data, they will decide whether the opportunity satisfies their fundamental investment requirements in terms of sector, stage, and geography. They won’t waste your or their time with an in-person meeting if the opportunity doesn’t satisfy their requirements.

Using capital raising agents or organizations

For startups, agents and specialized groups offer money-raising services. Typically, a success fee that is calculated as a percentage of the investment round is used to pay these organizations (ranging from two to ten percent).

As a guaranteed minimum payment amount for their services, certain businesses could demand a monthly retainer. After the engagement, the retainer is typically subtracted from the success fee.

When choosing an agent, conduct your research like you would with any other business transaction. Verify their references, and consider their performance history and reputation. While some investors prefer to assess investment deal flow from real sources, others embrace the suggested leads from agents who have thoroughly investigated and investigated an investment possibility.

Early-stage investors expect to see all of their funds used to develop the technology and business plan because round sizes are often minimal (and not used to pay an agent).

What Do Investors Look For?

When considering whether to invest their own money or the money of their firm in another business, investors consider a variety of factors.

This entails looking at a company’s:

Idea or item (is it distinctive? Are the features distinct if not? Why will this sell if not?
Enterprise Plan (including market analysis, and product performance)
Management group (does senior management have the training and experience necessary to meet the goal?)

Financial information, such as:

Earnings (to date)
Charges (what income is spent on)
Budget forecasts
Success indicators
When the time comes, investors will also want to know how they can withdraw their funds from the company.

What Is an Investor’s Fair Percentage?

How much money an investor is willing to invest in a firm is frequently closely correlated with the percentage of ownership the investor receives. However, because there are so many unique factors in every organization, there is no precise proportion to calculate.

But keep in mind that if the proportion is too low, investors won’t find the capital investment to be worthwhile. Offering an investor 5%, for example, is probably pointless because even if the business succeeds, the investor can anticipate nothing in the way of return. He will also need a lot of time to start making a profit, let alone recover his initial investment.

Summary

It is never too early to reach out to potential investors for your startup. A venture capitalist or angel investor is invited to an investor meeting where you can pitch your business concept. Tens of thousands of small businesses receive funding each year from investors who believe in their potential.

11 tips on how to prepare for an investor meeting

You should bear in mind these 11 success tips as you get ready to meet with a possible investor:

Perfect your business plan
Prepare your pitch deck.
Share your financial statements
Recognize the size of your market
Make the right first impression
Consider the questions you’ll be asked
Be willing to accept criticism.
Knowing what you know
Know what makes you comfortable
Research your investor
Remember to follow up after the meeting

1. Perfect your business plan

Your business plan explains how your venture becomes a successful enterprise. It details the growth and success tactics you’ll employ as well as the estimated capital expenditures for each component. Your business plan makes the case for why investors should believe you will succeed before they invest money in your venture.

2. Prepare your pitch deck

The sections of your pitch deck that describe your vision, current traction, market opportunities, income potential, team members, competitor research, how you differ from the competition, and more are included.

All of these paragraphs ought to do more than just list information; they ought to create a story about your startup. A compelling narrative plus a strong body of evidence can work well together. You should print one replica of your pitch deck for each participant in the room before the meeting.

Before the meeting, you should submit your pitch deck to every participant so they can examine it. You should also send along the agenda if one is being prepared for the investor meeting.

Potential investors may have questions in mind after reading your pitch deck teaser, and your printed deck will simplify things for them to follow your presentation. The investor meeting is expected to be more fruitful as a result.

3. Share your financial statements

Information on how you anticipate your operations will generate a profit should be included in both your business plan and pitch deck. These arguments must be supported by the financial statements’ numerical data.

Investors will also want to know how much you’re spending, how much you expect to spend, and how you intend to use their money. Forecast how your existing assets, obligations, and net worth will change in one, three, and five years, taking into account your present financial situation.

You should outline your monthly financial intentions for the foreseeable future in addition to this prediction. Once these figures are determined, you may demonstrate to potential investors how their contributions might alter your estimates. Potential investors won’t back you if your calculations don’t indicate profits for them.

You’ll need to devote a lot of time to demonstrate how the investment funds will profit both you and the investors. Even better, make a backup financial plan in the event your first one doesn’t work.

4. Recognize the size of your market

If another business is having huge success with a comparable concept, a wonderful idea could not work out as planned. Investors are aware of this and anticipate that business owners like you will give a thorough competitive analysis.

Despite the clear existence of another major player in your business, you should describe how you are unique from your rivals and how you may prosper there.

5. Make the right first impression

The final step is to provide this information at the meeting itself. The first four tips help you create the documents you need for your investor meeting. Consider what could astonish your investors and what might turn them off.

Start focusing on truly and organically incorporating those amazing qualities as soon as you shake hands with possible investors. Being prepared and well-organized with your presentation and documents is a key component of generating the correct first impression. Use a meeting program like Fellow to accomplish this.

Take into account the following advice as you get ready to make this first impression:

A few minutes early will give you time to gather your thoughts and regain your breath.
Change into your meeting outfit.
Throughout the meeting, be positive and personable even while answering hard questions.

6. Consider the questions you’ll be asked

You must be aware that investors need to exercise caution when handling their funds. They’ll have a lot of questions. The good news for you is that since these inquiries frequently fall under the same headings, you may prepare adequate responses in advance.

You can describe your preparation for these inquiries in the Fellow note’s private note section. Be prepared to answer questions about how your startup is better than its rivals at solving particular problems.

Additionally, you should be ready for inquiries about your capacity for growth, the credentials of your team, and your current level of traction. Additionally, you can be questioned about how the investor’s funds would affect your plans. To avoid being caught off guard, be prepared with your answers to these questions.

7. Be willing to accept criticism

The majority of investors already do this. They are aware of what works and what doesn’t. Therefore, rather than taking offense to criticism, consider your investor’s suggestions as chances to get better.

Perhaps the investor thinks you should add new crucial jobs, like Chief Marketing Officer, or thinks you should reclassify the roles on your team. Take into account their counsel; it is based on knowledge.

8. Knowing what you know

When an investor criticizes you, it’s frequently because they know something you don’t. Assuming that your expertise or knowledge disproves the investor’s viewpoint is not a good look. Instead, acknowledge that your investor is more knowledgeable about the topic at hand and express your appreciation for their viewpoint in public.

You are a far good investment than an obstinate know-it-all who won’t listen if you demonstrate humility and a demonstrable capacity for listening.

9. Know what makes you comfortable

To obtain the financing you need when working with venture capitalists, you’ll probably have to trade a portion of your company. You decide how much of this share to offer. Tell an investor upfront if you’re only willing to accept 20% of a share if they ask for 30%. Even if you lose the agreement, would you have been content with it at first? Most likely not.

10. Research your investor

You could be tempted to concentrate only on yourself and your company when pitching investors. Although that reasoning makes sense, the strongest pitches demonstrate that you have done your research on both you and the potential funders.

This implies that before your meeting, do some research about your investor and share what you find out. No, don’t recite a laundry list of the investor’s characteristics, but do connect their hobbies and presentational preferences to important points in your pitch.

Consider the scenario where a green business investor visits your cryptocurrency enterprise. In this situation, you can bring up the investor’s experience with green investments while talking about your company’s unique feature of making cryptocurrency eco-friendly and link it to your company’s objective and particular action points, like switching to renewable energy.

By doing this, you may demonstrate to the investor that you are interested in both their money and your vision by tying your presentation to their interests. You can close the transaction by adding that personal touch.

11. Remember to follow up after the meeting

After everything is said and done, a final “thank you” note to the meeting attendees is a great touch. In your email, you can offer a narrative of the meeting that includes the agenda, any notes, additional questions, and suggested actions. The guest users function on Fellow can assist in organizing those notes, obey points, and next actions while showcasing your attention to detail.

Summary

Perfect your business plan and prepare your pitch deck before meeting with an investor. Share your financial statements and make the right first impression on potential investors. Be willing to accept criticism and be comfortable in front of potential investors as well as a strong team and compelling narrative.

Three Types of Investors

1. Pre-investors

This is a general term for those who haven’t started investing yet. It includes friends, family, and close personal contacts but excludes all professional investors. These are people who are new to investing but may have money they are willing to put into your company.

Businesses in their earlier phases may only have access to pre-investment finance from close personal contacts. At this point in the business lifecycle, you generally don’t have hard evidence or any firm indicator that your business will be successful in the long run.

Pre-investors are investing in you directly because they know you, trust you, and believe in you. These types of investors often don’t contribute a lot of money up-front. Depending on the number of funds your pre-investor has available, it might be as little as $1,000.

2. Passive Investors

Passive investors adopt a buy-and-hold strategy that they anticipate will pay off in the long run and limit the amount of hands-on management they individually provide to the assets they own.

A passive investor will submit to the operational and financial decisions made by the management team rather than taking an active part in the management of a firm. Investors who don’t hold a majority stake in the company they invest in frequently find themselves in this situation.

The majority of the time, passive investors put their money into businesses run by management teams they respect and look to for advice.

Angel investors (and why they might be different)

An accredited angel investor is required. This indicates that they can afford to lose every penny of their investment. Additionally, you’ll require legal counsel to give you advice on how to approach private investors for investments.

Aim for knowledgeable angel investors that have knowledge and expertise in your sector, as well as investing experience. They will contribute to the development of the company and make desirable co-investors for VC firms in the following rounds of funding.

Angels may flock to your offer if they are attracted by a prominent angel or an important member of an angel network. Recognize the reasons behind the investor’s decisions since they frequently have two goals: to make money (from their after-tax personal savings) and to give back to society by assisting the future generation of entrepreneurs.

If the venture contributes to the resolution of a social, environmental, or health issue that appeals to the angel or their family, they may even have a “triple” bottom line. Recognize both their private and professional interests. Depending on the degree of their relationship with an entrepreneur, angels frequently make highly private decisions.

Angel investors

One category of passive investors is angel investors. These are super wealthy individuals seeking startups and new companies they think will succeed in the long run. These companies frequently are so tiny and young that they haven’t yet begun to turn a profit.

As a result, when they select a profitable asset, angel investors might profit hundreds of times over their initial investment. Angel investment entails a lot of risks, though.

There are no assurances that a startup will ever become an industry leader, and angel investors frequently have little meaningful control over how businesses are handled. Angel investors have limited effect on a startup’s success or failure, other than their informal influence over business leadership.

3. Active Investors

A hands-on approach is taken by active investors while managing their portfolios. These investors want to have a say in how their funds are managed. In a private equity setting, active investors could bring in new personnel to support management teams and confidently alter the organizational structure of a company.

Based on their knowledge and experience, active investors look for chances of making operational, financial, and administrative adjustments. Because of this, active investing typically carry higher risk, but when done successfully, it can also produce higher profits.

Active investors often aspire for a controlling interest to influence company operations. These investors put a lot of time and effort into financial analysis and appraisal before investing because this also raises risk exposure.

Venture Capital Firms

Active investors include firms that provide venture capital. Compared to angel investors, these companies invest in companies a little later in the development life cycle. In the usual venture capital scenario, the company already has a working, tested business strategy and may even be making money. To increase its activities, however, to make sizable profits, it needs more resources.

Venture capital firms often receive lesser multiples on their profitable investments because they enter the market later than angel investors. A venture capital firm might make ten times its initial investment while an angel investor might make 100 times its investment in a flourishing business.

Venture capital companies, however, take on less risk than angel investors. They typically request a seat on the board since they are active investors and can influence business choices even if they don’t necessarily own a majority share.

Private Equity Firms

Private equity firms seek out established, mature companies to invest in. They frequently look for a controlling interest in a company and employ tried-and-true leadership techniques to boost performance over time.

When the private equity company acquires a majority share and contributes its management expertise, this technique is typically less risky than venture capital or angel investment.

Meetings with investors are simply that: meetings

Meetings with investors can be frightening. Since there is a lot of money available, those who can offer it can appear to be extremely imposing characters. But ultimately, an investor meeting is just a conversation between people, like any other meeting.

You can make sure you’re putting your best effort forward for this significant opportunity by using these 11 preparation suggestions to help you prepare for a fruitful and successful investor meeting.

Which Investment Strategy Is Right for Your Business

Professional investors typically look for companies that fit their portfolios and have certain features. They can be looking for companies that are located in a region or industry they are familiar with.

They could concentrate on companies that are a given age, have a specific market capitalization, or have particular operational or financial requirements. Finding an investor prepared to listen to your pitch and provide your company with the resources it needs will be simpler the better you understand your business.

It’s also a wonderful idea to look at investor portfolios when screening potential investors. Think about how similar your firm is to the others on the list and compare it to the other companies in the investor’s portfolio.

The likelihood of getting their money is significantly better if you can identify someone who regularly invests in businesses similar to yours.

FAQ’s

Following are some of the important questions:

1. How do I get in touch with an investor?

Send an email request to meet with an investor since it is quick and simple to circulate within an investment firm or angel network. A persuasive elevator pitch outlining who you are and what you do should be included in your email to the investor.

2. How do I find investors early?

How a startup can find investors

Consult your loved ones and acquaintances. When they need investors, many beginning business owners sometimes turn to their friends and family first.

Find sources of equity financing.
Request a loan from the Small Business Administration.
Identify private financiers.

3. What is a fair percentage for an investor?

But what proportion is reasonable for an investor? The typical norm when it comes to angel investors is to offer between 20–25% of your company’s profits. This is the return that investors will expect if you sell the company when it is still young.

4. How do investors get paid back?

There are several main methods you could pay back an investor: Buyouts of ownership: Depending on how much equity your investor has and how much the company is worth, you buy their shares back. A repayment plan: This is ideal for commercial loans or a short-term investment contract with an assumption of repayment.

5. Is it hard to find investors?

The process of locating the right investors is frequently more time-consuming and challenging than you might anticipate. Building trust and connections with angels takes time. Therefore, it’s never too early to start networking, even if you’re not quite ready to attract finance.

6. How can I find investors for free?

Yes, fortunately, there are many free angel investor lists available, and many of them can be found by performing a basic internet search. Website Invstor is one in particular. Entrepreneurs, job seekers, advisers, investors, and everyone else involved in the startup sector can connect through the Invstor Network.

7. How much money should I ask investors?

Don’t ask for a $5M investment if your business is in its early stages and has a valuation of less than $1 million. The investor wouldn’t want it since he would have to buy your business five times over. You may legitimately request $200k to $300k and provide 20% to 30% of your firm in exchange if your valuation is around $1m.

8. Do investors get paid monthly?

For stock investors, dividends are a type of monetary remuneration. They stand for the portion of profits that are distributed to shareholders, typically on a monthly or quarterly basis. Similar to interest income, dividend income is often paid at a defined rate for a predetermined period.

9. How do you pay a silent investor?

Depending on their work and ownership stake in your company, silent partners are compensated. Let’s assume that your business is worth $500,000 and that your silent partner contributed $50,000. They will therefore get 10% of the company’s profits and have 10% ownership in the company.

10. Do you have to pay back investors if your business fails?

If the startup succeeds, you’ll both benefit financially. On the other side, an angel investor won’t expect you to repay the money if your business fails. There is a catch even though you aren’t legally required to give your investor their money back.

Conclusion

It is never too early to reach out to potential investors for your startup. Tens of thousands of small businesses receive funding each year from investors who believe in their potential. Be prepared and well-organized with your presentation and documents for an investor meeting. Forecast how your existing assets, obligations, and net worth will change in one, three, and five years. Be willing to accept criticism and consider it as an opportunity to get better, rather than taking offense at it. Know what makes you comfortable with trading a portion of your company.

How to meet with investors