Spending months learning about a technology and the business related to your startup makes you an expert. The knowledge base developed in preparing the documentation and presentations is extensive. Conduct the tasks properly and there should be few people that know more about your business sector than you do. This makes you the guru of your field and the best person to explain the business to investors.
Becoming an expert in a field is a true education in itself; you learn all about the technology, markets, marketing, product specifications, manufacturing and much more. The whole process is like obtaining an advance degree. The pitch and questioning by investors is similar to a thesis defense sometimes. Investors judge you on your level of understanding, command of the business, and confidence. The investors will seek to understand how they might make money by investing in your company. Even this process of questioning and answering becomes part of a learning process.
Getting in the door of the investors’ offices is a task that requires marketing of a sort. Identifying potential sources of funds becomes the launch of a financing tour. Sending them a slide show or executive summary might be step two. Networking helps in this phase if your contacts know the investors and make introductions on your behalf. People are more likely to consider a meeting with someone that referred by trusted colleagues.
The initial visits are important as they provide an overview of the company and the management. The investor must walk away from that meeting wanting to know more and remaining enthusiastic about the team and technology. They must see the upside of any potential investment and will weigh that against other investment ideas they are reviewing at the time. It is important to think of the process as a competition since your company will be competing for dollars against other companies under review.
Your ability to explain the company in easy to understand terms is critical. You must remember that you know this company so well that all the required background concepts are part of your makeup. The investors you are speaking to may not have the same level of understanding and require more handholding. Presenting the company may require your educating the investor so they can share in your understanding of the company. It will take more than one visit to bring them to a desire to invest. Do not assume your technology or business as so simple that everyone will get it immediately. This can be a serious problem because the investor may miss key points and they will lose interest in proceeding to any a follow up meetings.
The key is to remember that investors only get involved if they like and understand your company! It becomes part of your responsibility to become an educator in addition to the guru. Teaching investors about your field and providing the background may help bring them closer to a desire of investing in the business.
You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at email@example.com or contact him via company contact info in the website. More Startup information is contained in his personal blog.