If you’re launching or growing a business, whether it´s a bricks-and-mortar cafe or concept for a new product, you might want some investment.
Most business owners don’t have the funds for a new venture when they first start out—instead, they reach out to investors, promising them a share of the profits later down the line. For investors, this is appealing as they usually make money doing so.
But if you’re pitching to investors, it’s crucial to let them know it’s worth their time. Here’s how to invest confidently and successfully!
1. Know exactly what you need funding for
Before you start to reach out to people, it’s important to know exactly what you need.
Break down your funding goals: product development, marketing, staff, infrastructure, or runway. Know exactly how much you need and what you’re prepared to offer in exchange.
The clearer your budget and requirements, the easier it is to gain credibility with investors.
Consider how much of the business you’re prepared to give away (such as 10% or 20%), and how much money you’d like in return. Have an ideal amount and a fallback amount, which is the minimum you’d accept for a particular share in the company.
2. Get your financials in order
Have up-to-date cash flow projections, burn rate and unit economics ready. Make sure that you know these off the top of your head and have a document with more detailed information. Include any projections for the future, too. Investors want to see a grasp of your business model, and proof that you know how to manage money.
3. Build traction before pitching
The numbers speak louder than the forecasts. Include real customer data, revenue, waitlists, or partnerships in your pitch.
Think of every success that your business has had, and make sure you consider it! If you’re pre-revenue, highlight the growth indicators or include testimonials for other business ventures.
4. Research the right kind of investors
Focus on VCs or angels who invest at your stage and in your sector—look out for people who have a record of investing and who have stated that they are interested in working on future projects.
Tailor your outreach and show why you’re relevant to their portfolio; try to find a common ground if you can.
5. Build relationships before asking for money
Start conversations before you need funding—don’t go straight in with a cold pitch.
For example, you could attend networking events or join conversations on social media, where you know possible investors are lurking.
Share updates, invite feedback, and keep warm relationships with potential investors, even when you’re not actively raising.
6. Tell a sharp, compelling story
The investors back people as much as products.
Be clear on your origin story, the problem you’re solving, and what makes your team uniquely qualified to solve it.
If you have a particular reason or backstory about why you’re creating this product, share this too. It doesn’t have to be a sob story but see how you can communicate your vision through a range of different means.
7. Prepare to answer tough questions
Expect scrutiny on your market size, customer retention, margins, competitors, and withdrawal plan. Practice answering with confidence and clarity. It’s likely that everything will be questioned, so make sure that you can answer these all confidently.
It’s a good idea to practice answering these questions before you start talking to possible investors. Do some practice runs with friends or families beforehand!
8. Don’t wait for windfalls
Investors rarely appear out of nowhere. Just like you wouldn’t count on winning a fortune on a casino website or thanks to a lottery ticket, don’t waste time waiting for someone to swoop in. Put into the work, make the outreach, and build your pitch pipeline.
9. Learn to get feedback and no for an answer
Rejections can be useful. Ask why, take notes, and adapt your approach. Keep the door open— ‘no’ today could be a ‘maybe’ later.
Use the rejections to build on your next pitch and make sure you keep tailoring it to avoid common mistakes.
10. Make it easy to say yes
It’s important to remember that investors have lots of people pitching them—and they can only say yes to a few people!
As well as a good business idea and excellent pitch, you can also set yourself apart by making yourself easy to work with from the offset.
Have your deck, data room and pitch documents ready. Respond quickly, communicate clearly and remove the friction from the decision-making process.
Final thoughts
Investing is essential for many business owners—and it’s definitely a process! Don’t expect anything to happen overnight but know with realistic steps and a comprehensive business plan, you can find your ideal investor and build your business.
