5 simple secrets to help win over investors

5 simple secrets to help win over investors

Kym Lam Sam
Aug 28, 2017 · 5 min read

According to this source, 3 new startups launch globally every second. That’s 10,800 per hour, or 259,200 per day! Each of these startups are talking about being the next big thing and how they’re going to change the world. Suddenly the idea you and your 2 buddies came up with over jagerbombs doesn’t seem so unique now does it?

That’s a lot of new startups, many of whom want to get investors on board to fund the development of their idea. Imagine being an investor though? Think of how many ideas pass by your desk via folders, emails and friend referrals? and how many pitches and meetings you attend? The amount of unvalidated drivel that you would hear would be astonishing.

It’s not that the ideas are bad or they don’t like the founders. It’s the lack of research, validation and reassurance being presented to them.

Here’s an all too common scenario:

A couple of rosy-cheeked co-founders sit down in a meeting with potential investors. Their moment has arrived and now it’s time to show them why their idea is the best. The presentation is flawless. Delivery on point. Everything seems perfect until they get told that they’re not what the investors are looking for.

I know way too many people who have shared this story. They are so confused. Their confusion usually leads to frustration and then anger. But is it really that hard to understand? It all seems logical to me. You’ve spent so much time focusing on your idea that you’ve not taken the time to focus on your first and most important customer. The investor.

I’ll use this awesome high school relationship analogy to help explain this better.

You’re just using me to get to my friend”

You know that feeling? You really like a person in class. You bond over time and you feel pretty good about what your friendship could turn into. One day, they approach you in a nervous yet deliberate manner. Your heart is pounding. Is this your moment?

Nope.

They’d like to know if you can put in a good word with your best friend because they’re so damn cute. I’d imagine that’s how investors feel quite often. Think about it.

You want THEIR money. You want THEM to take a risk. They give you some time to explain yourself and you present nothing of value except the fact that you actually don’t give a shit about them, their money and the risk they’re taking. You haphazardly blurt out some financial forecasts and some weak validation but nothing to convince them that the idea is worth taking a risk on.

You’re so focused on you and your idea that you’re not demonstrating how you can add true value to the customer sitting in front of you.

How are you going to help them achieve their goals. What do they desire? What do they really want? Money! Surprise! Return on Investment (ROI). That’s the business they’re in. Not charity.

So how can you show them that you mean business and care about their goals?

1. Validate. Validate. Validate.

Your gut feeling doesn’t matter here. It’s all about the numbers. Pure data that proves you have something the people want. I don’t care how smart you are, or how disruptive your idea is, if your target end-user doesn’t want to use it, you have nothing.

The act of validating is not enough. You need QUALITY validation as well. You need to work for it, but it’s worth it. Here’s some tips:

  • Do thorough research on your target market. Understand who you need to talk to in order to get the data you need.
  • Ask quality questions. Asking someone if they wish they earnt more will guarantee a 100% ‘yes’ response, but is useless to you. Craft your questions carefully to get the best possible results.
  • Quantity matters. You know what’s better than 10 hotels wanting your service? 100. Pretty straightforward.
  • Create a prototype. Make it out of origami, draw a picture, have a digital mockup, it doesn’t matter. So long as it clearly communicates your idea and it’s purpose, the people will enjoy a more hands on experience.

2. Strategic clarity

Do you know who you are and what you do? Can you explain it in 30 seconds? I find everyone falls into 1 of these 3 categories when it comes to explaining themselves:

  1. They nail it. God bless their soul.
  2. They waffle on and use every buzzword in the book. It sounds good, but to the more learned listener, nothing of value was actually communicated.
  3. They have no clue. This person turns a 30 second pitch into 3 minutes, complete with “ums”, “ahs” and a newly developed speech impediment.

Know thyself. Investors are not just investing in your idea, but you and your teams ability to communicate and execute. You can’t reach your destination if you don’t even know where you’re going.

3. Strategic alignment

Why approach an investor who invests exclusively in FinTech and pitch something related to Education? Show some respect and research the people you are asking for money from. It shows professional courtesy and you won’t be wasting everyones time.

Secondly, understand their values and see if they align with your own. Do they care about the environment or about supporting the local farmers? You will be working together for quite some time so strategic alignment will make the journey easier.

4. Know your numbers

Remember, investors do this for a living. They know money and they know numbers. Don’t ask for large sums of money for little equity with nothing to back it up.

Ensure all your industry data is up-to-date and don’t speculate or embellish. You don’t want to look like a fool when your lie gets uncovered in a meeting. Reputation matters.

5. Make a decent offer

You have validation, you know who you are and what to do, your values align and the numbers look good. Now it’s time to make an offer. If you want to be taken seriously, put a serious offer on the table. If you’ve done the first 4 steps right, you’ll be able to negotiate your offer without breaking a sweat. You’ll understand your own value and when to dig your heels in.

It’s a tough gig trying to get investors onboard. Particularly for new startups. I don’t have all the answers but hopefully these tips help you on your journey.

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Kym Lam Sam

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I love getting people excited about life! #LiveLarge with #NoFear | CEO @zerofoxgibbon

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