Avoid these beginner mistakes when approaching investors
These are some of the most common mistakes beginners make when they approach investors. Let's take a look at what they are and how to avoid them.
Mistake 1: Talking to the wrong investor
Investors usually have websites that clearly define the areas they operate in and the types of businesses they invest in. If you approach the wrong investor, they quickly realise that you did not do your homework before approaching them. They will not be interested to continue discussions on raising funding, and even worse, they won't refer you to someone who could be the right fit.
Solution: Be prepared!
Use Google to do a search on investors you are approaching. Every investor's website will say what they invest in and include a portfolio of businesses they have invested in.
Mistake 2: Long unclear emails or messages
Your first contact with an investor is to make an impression. You want to get their attention and get them curious about who you are and what you do. Starting by dumping a long business plan and many additional attachments is a major turnoff. You need to demonstrate that you appreciate their time and that you are aware of how busy they are.
Solution: Keep it simple
Only send investors an introduction to yourself and your company, and ask for one clear thing. Your initial contact is only that - a contact. Don't ask for investment on your first meeting.
Mistake 3: Long business plans
Business plans are long and take a major time commitment to read. They are also theoretical documents, and are often proved wrong soon after launching. Investors don't have time to read these documents, and although they are interested in the long-term strategy of your business, they do't want to read excessively to find it.
Solution: Send a brief pitch deck
Business plans are not an essential tool used in raising funding. The process is outdated, expensive and time-consuming. Introduce yourself with a powerful one-line pitch. Then if requested, send an impactful and concise pitch deck.
Mistake 4: No online presence
There are so many different platforms for your business to have a professional online presence, and for you as the founder to have a platform to introduce yourself to the marketplace. Some of these platforms are completely free to use, while some have a small price tag attached.
It is common practice to do a Google search on a founder or business during the investment process. They expect to get a result.
Solution: Select at least one platform and create a profile
It is not a prerequisite to have a website, but you do need some type of online presence. Even if it is in the form of a LinkedIn account or Facebook page.
Keep these rookie errors in mind when you approach investors.
A well prepared introduction with requested documents on hand leaves a powerful impression. In an investment landscape that is inundated with founders seeking funding, it is essential to avoid these errors and be prepared every step of the way.
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