WHAT TO DO WHEN MEETING AN INVESTOR FOR THE FIRST TIME

The first meeting often has a major influence on an investor's decision about whether to invest in you. The golden rule of business deals is “underpromise and overdeliver.”

Here are tips to help you make a successful impression at your first meeting with a potential investor.

1. Focus on the Right People Who Want to Invest

Initially, you should focus on researching potential investors who have expressed interest in your business sector. One way to find these investors is to post a brief introduction to the project seeking funding and detailed information about yourself on social media.

Aliston Johnson, co-founder and CEO of InstaEDU, used this focused strategy to raise funding. She said: “I sent brief summaries of my business idea to investors who followed my personal profile or InstaEDU on social media.”

Johnson said this initiative led to several face-to-face discussions and eventually persuaded an investor.

2. Make sure your business plan is sound

Of course, before raising funds, one thing you need is to prepare your company's name, overview, and logo. Investors need to visualize the business they are dealing with.

Next, prepare a brief introduction outlining your current field of activity, the market need you intend to address, and how your company will meet it. You should also explain any relevant market research you have already conducted.

Next, present your plan for delivering products or services to customers, the distribution and advertising channels you intend to use, and your communications strategy. In this section, remember to include your capital recovery model and your plan to stimulate customer demand for your products or services.

Use every method available to explain your idea effectively to investors, including images and screenshots if needed. If your product or service has never existed on the market, prepare documents demonstrating brand and intellectual-property protection.

In the team introduction, summarize the expertise, skills and roles of each key company member. Finally, clearly outline the company’s current financial situation.

The purpose of this preparation is to ensure that no investor, after reviewing your plans, has to ask the classic question: “Why should I invest in your company?”

3. Do not rush to ask about money

Clearly, if you do not need money from that investor, you are unlikely to approach them. However, do not rush to bring this up at your first meeting. Investors will be more interested in the details of your business plan and your passion for the company than in a conversation focused solely on how much money you need.

‘In your first conversations with potential investors, you should share your startup story, your passion, how you nurtured the business idea, and the value your product or service brings to customers,’ said Trevor Gerszt, a venture investor and founder of Goldco.

“Explain the business idea and make it feel familiar to them before beginning the conversation about investment and fundraising,” Gerszt advised from experience.

Sim Shagaya is a Nigerian entrepreneur and founder of Dealdey and Konga. He successfully raised a total of USD 78.5 million from Swedish investment company Kinnevik and South African media giant Naspers.

Sim Shagaya said his secret to successful fundraising was presenting potential investors with a rigorous business plan and an engaging pitch before introducing the amount of capital needed.

4. Do not exaggerate excessively

Investors like to hear the truth. Because they all care about returns, they do not want an exaggerated presentation of your project. Do not promise what you are unsure you can deliver. When calculating the project's revenue, be as realistic as possible and consider any inconsistencies that may arise.

Try not to sound arrogant in your pitch, and feel comfortable telling investors when you do not have answers to some questions.

The golden rule for presenting your product is to ‘set low expectations and deliver high results.’ This way, investors will be pleased when they receive their first returns and willing to invest more in your later fundraising rounds.

5. Accept criticism positively

Treat all negative feedback on your project as an opportunity to better understand investors’ perspectives. You can then take that feedback away and consider the changes needed to make your next pitch better.

Remember never to react negatively to criticism from potential investors. They may well change their minds in the future and want to work with you again.

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