The first step towards getting investors on board for your startup is to write an amazing pitch and send it to a targeted list of potential investors. After you do that, here are four additional tips for getting investors on board.
Before you talk to a single investor, you have to build your pitch. This is not as complicated as many make it out to be. Even at the highest levels, it can be done on PowerPoint, Keynote, or any similar software. Using the example of a meal-kit delivery company, here are the five aspects of the type of pitch that will quickly lead to a signed term sheet.
On one hand, starting a business is always more expensive than you think. Often, there are dozens of costs you haven’t planned for or budgeted for. You will need all the money you can get. On the other hand, every dollar you raise is going to cost you, either in interest payments or in equity. When you look at fundraising from this perspective, you only want to raise as much as you have to.
Financing your startup can be incredibly complicated from a legal standpoint. For the seed stage, it can be as simple as writing a check, but for anything beyond that, you will want financial experts involved. Investors will ask you about the legal structure behind the financing round. Learn about the difference between debt and equity financing.
No matter what stage your startup is in, chances are you will be in position to benefit from raising money at some point in the near future. Connecting with the right investors can be extremely difficult, especially when you have a million other things to deal with. Often, startups are so busy with operations that they will take cash from whoever will give it to them.
Companies raise money to be in a position to seize an opportunity. This opportunity usually entails solving a market pain point problem in a novel way. Conversely, investors give money to companies on the assumption that the value of solving a particular market pain point is much greater than the value of their investment.