You’ve met an investor and are invited for a cup of coffee or a 1-on-1. That’s a great signal, you passed the first bar. But watch out. You are not there yet. It’s usually the first personal meeting where an investor finds out whether his hunch was right and makes up his mind about you and your business. It’s the moment to show what you are worth. For this article we asked startups what they believe are the most important factors for a match between a startup founder and an investor, so you know what to talk about.
You as a founder are the most important aspect of your business. When you’re starting a business venture, the founding team shapes everything from the product to the brand, voice, and culture of your company. So explain why you have the competencies to run and grow a business. Explain that you know your strengths and weaknesses, and how you deal with them. Also show how committed and motivated you are to make your business succeed. But don’t pretend to be what you are not, just be yourself and show who you really are.
You are asking for money, so clearly explain how you will use that money to make sensible investments to accelerate growth, and where that will lead to. For example: I am looking for €100.000 for 15% of the company, to invest in online marketing, sales and distribution, which will grow the turnover with 55% in the next 2.5 years. Your numbers have to check out. Therefore seek evidence from recognized sources, and spend time with industry experts and real customers, to quantify your opportunity and prices.
Last not but least is the exit. Equity investors step in for a limited period of time. So make sure you explain how the investor can cash out on his investment. After all, to make a profit he needs to sell his shares after the company value has increased. In the ideal situation an investor can reap the benefits of his investment after 3 to 7 years when the company is sold to the market leader or via IPO. In those cases there is a high premium that will lead to great ROI. Other exit strategies are selling back his shares to you, or to another investor.
So here you have it. Make sure you give enough insights in yourself, your growth strategy and the exit, and you might well find your future investor.
The Netherlands Chamber of Commerce is one of the main partners of Amsterdam Capital Week. With a series of blogs I, Martijn Lentz, entrepreneurial finance expert at KVK, share my lessons and pitfalls on how to get funding for your startup.