Entrepreneurs who are looking to raise money - whether from banks, angle investors or venture capitalists - face tough conditions. In my own case, I have to share 35% of all the Profit with the developer. Which means 'Profit we share- while the losses will be all mine.' Your best bet is to keep it simple, and be sure that your new business presentation touches on these five key areas:
1. What's in for them?
Occasionally, an entrepreneur hoping to launch their first business puts so much thought into the concept that he or she neglects the financial and legal plan - and unfortunately, this often becomes apparent early in a meeting, when an investor can lack clarity in what exactly the proposed deal is going to look like.
Before you set up any meetings, gather your team and decide on your foals for your business and how much capital you need to inject to achieve them.
Will you accept money in exchange for a stake in the business, or does it make more sense to take out loan? What conditions are you willing to have tied to those investments? How much in terms of shares of the company or of its future profits would you be willing to give up in return for start-up financing? Your potential financiers will likely ask these question, so be ready to give clear, well reasoned answers.
And as you prepare your presentation, remember that your future backers will want to know how soon they can expect to see a return on their investment as well as possible 'exit strategies'.
2. Be concrete
Winning the trust of an investor means demonstrating a thorough knowledge of your concept or industry and laying out your step-by-step plan for offering something that's new, innovating and will deliver healthy returns on their investment aka 'ROI'.
Explain how you will turn your great idea into a terrific service or lay out your manufacturing plans in detail. Demonstrate how your approach will provide this for less than people are willing to pay, therefore covering your costs and turning profits.
Look them in the eye and inject lots of positive language like, 'we will deliver' and avoid whisy-washy phrases like, 'it is hopes that', 'this should be the luck' or 'could well result in'.
3. Be unapologetically disruptive
Emphatically explain how your new company will give your customers a better deal than your competitors. And if you think you don't have any competitors, think again. If there is true potential for your concept then you can count on someone else rapidly jumping in to try and exploit the same opportunity.
If a bank or other investor is looking at your business they have almost certainly looked at your competitors as well. In your presentation, therefore, it's imperative that you understand your competition and irreverently explain why your business will do better. Blow them away! Avoid being overly negative. At best, you will seem humourless and self-important, and at worst, like you don't take your competitors seriously enough.
4. Prove that growth is sustainable
There will forever be new markets and new sectors emerging as things change and old business reach the end of their life-spans. Nothing stays the same for long, so explain how you plan to tackle the inevitable technological changes and market shifts that are heading your way.
Infinite growth may be impossible in a world of finite resources: so discuss your challenges in terms of resources and waste, and present a plan that inspires confidence in your new venture's ability to sustain the community and the environment.
5. Demonstrate bench strength
Do you have the team in place to take your business forward for the next decade, and do their CV's suggest that they'll be up to the job? Show prospective investors that you have founded the right people to work at your new company. Your backers will want to know their money will be in good hands. You also need to show that you have someone on the team who can take over from you the day you decide to move on to your next brave new venture.
The gloom about the global economy means your competitors may be scrambling to hold onto their customers. This is a great time to offer innovative approach. There are investors and banks that realise this and, if pitched the right way, are still willing to take risks.
So be assertive, keep your pitch confident, concise and clear and you may soon be seeing that unforgettable first investment cheque. Good luck!
1. What's in for them?
Occasionally, an entrepreneur hoping to launch their first business puts so much thought into the concept that he or she neglects the financial and legal plan - and unfortunately, this often becomes apparent early in a meeting, when an investor can lack clarity in what exactly the proposed deal is going to look like.
Before you set up any meetings, gather your team and decide on your foals for your business and how much capital you need to inject to achieve them.
Will you accept money in exchange for a stake in the business, or does it make more sense to take out loan? What conditions are you willing to have tied to those investments? How much in terms of shares of the company or of its future profits would you be willing to give up in return for start-up financing? Your potential financiers will likely ask these question, so be ready to give clear, well reasoned answers.
And as you prepare your presentation, remember that your future backers will want to know how soon they can expect to see a return on their investment as well as possible 'exit strategies'.
2. Be concrete
Winning the trust of an investor means demonstrating a thorough knowledge of your concept or industry and laying out your step-by-step plan for offering something that's new, innovating and will deliver healthy returns on their investment aka 'ROI'.
Explain how you will turn your great idea into a terrific service or lay out your manufacturing plans in detail. Demonstrate how your approach will provide this for less than people are willing to pay, therefore covering your costs and turning profits.
Look them in the eye and inject lots of positive language like, 'we will deliver' and avoid whisy-washy phrases like, 'it is hopes that', 'this should be the luck' or 'could well result in'.
3. Be unapologetically disruptive
Emphatically explain how your new company will give your customers a better deal than your competitors. And if you think you don't have any competitors, think again. If there is true potential for your concept then you can count on someone else rapidly jumping in to try and exploit the same opportunity.
If a bank or other investor is looking at your business they have almost certainly looked at your competitors as well. In your presentation, therefore, it's imperative that you understand your competition and irreverently explain why your business will do better. Blow them away! Avoid being overly negative. At best, you will seem humourless and self-important, and at worst, like you don't take your competitors seriously enough.
4. Prove that growth is sustainable
There will forever be new markets and new sectors emerging as things change and old business reach the end of their life-spans. Nothing stays the same for long, so explain how you plan to tackle the inevitable technological changes and market shifts that are heading your way.
Infinite growth may be impossible in a world of finite resources: so discuss your challenges in terms of resources and waste, and present a plan that inspires confidence in your new venture's ability to sustain the community and the environment.
5. Demonstrate bench strength
Do you have the team in place to take your business forward for the next decade, and do their CV's suggest that they'll be up to the job? Show prospective investors that you have founded the right people to work at your new company. Your backers will want to know their money will be in good hands. You also need to show that you have someone on the team who can take over from you the day you decide to move on to your next brave new venture.
The gloom about the global economy means your competitors may be scrambling to hold onto their customers. This is a great time to offer innovative approach. There are investors and banks that realise this and, if pitched the right way, are still willing to take risks.
So be assertive, keep your pitch confident, concise and clear and you may soon be seeing that unforgettable first investment cheque. Good luck!
No comments:
Post a Comment