Entrepreneurs often ask me how they can increase their chances of finding an investor. The chance of finding an investor depends partly on factors that can be influenced, but also partly on factors that cannot be influenced.
Which factors are few or no influenceable?
- Your product. Some products are more appealing than others. It is less sexy for an investor to invest in toilet rolls than in a robot fishing all the plastic from the sea.
- The scalability of your product. How easy can you scale up your product? With an online platform like www.invest2start.com, this is very easy. But if you manufacture bulldozers, then it requires quite an investment if you want to scale up.
- The revenue you have already achieved. If you can demonstrate that people are willing to pay for your product/service, then an investor will be much more willing to invest in your company.
- The securities you can bring in. If you contribute security (e.g. mortgage registration on real estate), you reduce the risk for the investor.
- During my studies, the concepts of’ Blue Ocean Strategy’ and’ Red Ocean Strategy’ were regularly discussed, the latter of which refers to fierce competition and the proverbial ocean turns red of blood. Of course, investors prefer to invest in a company following a Blue Ocean Strategy.
- The size of the market.
Which factors can be influenced?
- Make sure your team is balanced. Team members must complement each other. No one is perfect, so make sure all the skills you need are in-house.
- The amount you want to raise in one financing round. I am often asked by entrepreneurs whether it is wise to raise a large amount of money in one or more financing rounds. If it is possible to raise the amount in several financing rounds, I recommend that you do so. There are many more investors who want and can invest €100,000 than investors who want and can invest €1,000,000. The lean startup method offers tools for this; splits the end result in measurable milestones and collects funding per milestone.
- Ensure a good, clear pitch. A good clear pitch on our platform consists of a catchy summary, some data on which investors can filter (e.g. amount of funding, country, etc.) and at least a filled investor pitch deck template as an attachment. Many investors need more financial depth. You can build this financial foundation with the EY Finance Navigator. You can also use a valuation report by Equidam or a simple excel template. And report in your pitch that you have an extensive business plan that you would like to share with investors if they so request.
- If a photo says more than 1000 words, then a video says even more. A short, concise video looks professional and impresses more than just text.
- If you don’t live in an English-speaking country, set up your pitch in the English language. Investors look beyond borders.
- Share your pitch on all your social media accounts. Ask family, friends and acquaintances to like and share your post with your pitch. As an example: on LinkedIn you score a point if someone finds your post interesting, two points if someone shares your post and three points if someone gives a reaction. The more points your post gets, the more people will see your post on their timeline. So, you have a lot of influence on how many people will see your pitch.
So, if you want to increase your chances on finding an investor, we recommend that you actively work with the factors that you can influence.