Thursday, May 19, 2011

Tips for Approaching Investors

Pre-work is usually required before you get a meeting with an investor.

As someone who is a big advocate of financial packaging - or making sure that you present both you, your company, and your financials in the manner that the financing source you are pursuing is most comfortable with - here is an article that I found very interesting. I believe you'll also find it highly informative and helpful. Tip #1 is one I say repeatedly, with a caveat. You have to start somewhere and sometimes reaching out to people and entities you don't know is the only viable way for you to get started. In that case, you have to find a common thread that connects you (alumni, church, other organization, similar interests) and weave that into your approach.

5 Tips for Talking to Investors

Make sure your growing company gets the funding it needs by perfecting your pitch.

A young company looking for outside funding won't get very far without a well-crafted pitch. And pitching to investors doesn't just mean showing them a raft of numbers; it also requires skillful storytelling.
A compelling pitch is especially important for seed-stage companies these days, given current trends in the venture capital market. Although first-time financings by venture firms in 2010 were up about 30% from 2009 — with more than $4 billion going to about 1,000 companies — the flow of funds going to seed-stage firms declined by 2%, according to the Moneytree Report by PricewaterhouseCoopers and the National Venture Capital Association.
1. Don't cold-call potential investors. Use your network instead to connect with angels or venture capitalists. "The first priority in approaching any investor is to have a credible referral," Erman said. This person should know "enough about the entrepreneur and the business to be able to offer recommendations that are authentic." If an investor allows electronic submissions, entrepreneurs should submit a plan and try to reach out through a referral.
Read the article in its entirety.

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