Pitching investors has always been a challenge for startups, and it may be even harder in the post-COVID-19 world. However, investor capital is still a viable funding path for certain businesses, depending on the amount you need and your overall goals for your company.
If you're seeking venture capital to fund your business or project, it's important to take time to find the ideal potential investors to pitch. Otherwise, you'll end up wasting your time — and theirs — working with investors who aren't a good fit.
Here's what you need to know about finding the right investor for your startup.
[Read: How Is Pitching Investors Changing After COVID-19?]
Compile a list of potential investors
There are countless venture capitalists and angel investors out there, but not every one of them will be interested in your business. That's why it's important to seek out those with a track record of investing in ventures in your industry.
Roshawnna Novellus, CEO of EnrichHER.com, says the best place to start looking for investors is within your own network.
"Often, we overlook the possibility of investors being in our own network to scale our initial stages of business," Novellus told CO—. "Before doubting your network's potential, use tools like LinkedIn, Crunchbase, AngelList and Signal to research and craft a strategic plan for outreach."
Research each investor to find out what they're looking for
Pitching investors is like crafting a resume: You shouldn't use the same exact version for every single opportunity. Each investor has their own goals and criteria for investing in certain businesses, so you want to make sure your pitch caters to them.
To help you better understand who you're pitching and what specific things they might be looking for in an investment opportunity, it's important to do your research.
"There are a lot of options available, so you really need to choose an investor who is perfect for you," said Carolyn Cairns, marketing manager at Creation Business Consultants. "Try to find out what benefits they can provide, like their assets and resources."
[Read: Everything You Need to Know About Angel Investors]
Listen carefully to the responses they give so you can ensure the investor you choose will work well with and for the company.
Carolyn Cairns, marketing manager, Creation Business Consultants
Send a polite, professional message to gauge their interest
Once you have your list of potential investors and a baseline knowledge of what they want, it's time to reach out and start a conversation. David Vranicar, managing partner and founder of FBS Fortified & Ballistic Security, recommends sending a personalized message to your potential investor via LinkedIn to find out whether they'd be open to a pitch.
"Social media … allows you to get a read on a potential investor's personality, even what other companies and competition they've invested in, and may even give you leads on others that could be potential investors," he said.
In your initial message to a prospective investor, be gracious, appreciative of their attention and brief.
"Have your story written and ready to copy-paste to them if they respond," added Vranicar.
Prepare the right questions for your pitch meeting
If you manage to land a pitch meeting, it's important to be prepared. Have a list of well-thought-out, specific questions to ask your potential investors during your conversation. These can include:
- Why are you interested in our company?
- Are you seeking a leadership position in our company? If so, what type?
- When was the last time you funded a company?
- How are your other investments performing?
- What do you think about our business and where do you see it moving forward?
“Listen carefully to the responses they give so you can ensure the investor you choose will work well with and for the company," said Cairns.
"Make sure you feel a partner-like atmosphere and always trust your gut-feel," she added.
[Read: 3 Practical Tips for Attracting Investors]
Be ready to keep pitching until you find the right investor(s)
Pitching investors involves a lot of rejection. You likely won't find someone who says yes after your first pitch. Don't get discouraged by a string of rejections and keep moving forward.
If you find an investor who's interested but doesn't seem like the right fit, don't be afraid to walk away from the money for better compatibility. Taking investor capital is about more than money; you're looking for a true partnership, especially if you're giving up equity in your company.
"The idea that 'much gathers more' is true," Vranicar said. "Diversify your range of investors, and court the ones that have a diverse portfolio, as well. Having investors involved in different areas gives you more access to industries you might not realize are beneficial, and investors with broad portfolios can ride out storms, be it yours or their own. Either way, you win."
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Want to read more? Be sure to follow us on LinkedIn!
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
