Things You Should Know Before Pitching To An Investor – Pitching to an investor can be some what intimidating, so you have to prepare very well before you take such a bold step.
We at AFROSAGES, will show you certain things you should know before pitching to an investor.
DO YOUR HOMEWORK
The first thing you have to do is do a little homework about your possible investor/s by creating a list of “smart money” investor/s.
Trying to raise money for a business is like any sales system. You gather leads, sort and prioritize those leads, and run though a process; using a tool like a sales funnel. After that you close the business.
When a business/start up is faced with financial challenges, most entrepreneurs call on anyone who can help. This is one process but definitely not the very efficient one.
Apply a business development mentality; vet the leads (possible investor/s), see which aligns with your business ideology, then work the sales process.
KNOW YOUR NUMBERS
We can’t stress how important this is. You need to know your numbers. Prove to the potential investor/s that your business has an excellent financial performance. Investors usually look for potential high returns and a clear exit strategy.
We advice you show proof that your current assets are enough to cover shirt term liabilities.
Be prepared to answer questions about the financial stability of your business/start up. Every investor wants growth so be prepared to show signs of growth or how you’ll scale the business to make more money.
If you have debts, show properly your debt repayment plans.
COST AND REVENUE
You have a good product that sells, an investor/s will like to know how much it takes to make the product. Can the product cost be cut down? This will give the investor/s the idea of your profit margins.
Every one loves revenue, an investor/s will like to know if your product is selling and how well. You have to know how many units is being sold, where it’s been sold and whether you’re promoting them.
BUSINESS OR START UP UNIQUENESS
Your product/service needs to be unique. What proprietary feature and competitive advantage does your product/service have? Can the investor/s be able to replica your business and even do it at a cheaper cost?
Prove with solid evidence that your market potential is very big to make investing worthwhile.
EXPERIENCE IN THE INDUSTRY
An investor/s will also research about you. Research your business experience and background in the industry. Most investor/s want experienced entrepreneurs with high performance and leadership records.
BUSINESS MODEL AND MARKET SIZE
How effective is your business model? Present a business model that will show how your business/start up become more profitable.
Investors want products/services that solve a bigger problem in society. That means you have a larger market size, that means you have the competitive edge, that means any investor will be interested in investing in your business.
Mind you different investors seek different attributes in a business model. It’s very important you customize your business plan to pitch to different investors.
I’m seeking for an investment of GHC _____ for a __% stake in my company. If you watch “Shark Tank” then you’d bebl familiar with this line.
This is basically telling the investor/s how much you think your business is worth. This is not just word of mouth or a random figure. You have to back it with facts, numbers.
Your assets, cash flow, debt, Inventory etc. Make sure you know how you arrived at that valuation.
Armed with all these information and facts, you can now pitch to that angel investor/s.
We wish you well in your business dealings.
Are you a small business, do you want advice and guidance about your to put your business in the digital world?
Reach out to us.