If you can’t convince people to invest in your company, you’ll find Alaska entrepreneurship can be difficult. You’ll have to rely on your own funds, and unless you’ve got a big bank account, that’ll severely limit what you can do. Money may not be the most important thing in the world, but without it your business is dead in the water.
So how can you secure investors, not just for the initial cash infusion but for future business? It’s all a matter of backing up your claims and bringing the right attitude to the table.
1. Be Confident and Passionate
While numbers are important, the way you present yourself can affect an investor’s decision as well. No one wants to invest in someone who doesn’t seem confident in their own product. If the maker doesn’t believe in the start-up, who will?
Being nervous is fine; letting anxiety take over your behavior is not. Do whatever it takes to control the butterflies before you meet with an investor. If you need to look in the mirror and tell yourself you’re the champ, do it. Get pumped. Exude confidence and passion and you’ll infect them with enthusiasm.
2. Keep a Controlling Stake in the Company
The entrepreneur will experience nights full of desperation, and unless you’re extremely lucky, there will be times when nothing seems to go right. Numbers seem to be dropping, and if they continue on that trend, you may have to do something extreme. Those are the moments when people do things they’ll regret, such as offering investors a larger stake in the company in an effort to get more money.
Not only can that cost you the start-up if the tides turn against you, it may not even work. Selling a majority share in your company reeks of desperation and can turn investors away. You could even lose existing investors if they catch wind of this. They gave the start-up money because they believed in you, and giving up majority control of the company is a clear sign that you’re not the guy they thought you were.
3. Have All Relevant Documents on Hand During Investor Meetings
Investors tend to be skittish individuals, and rightfully so. It’s only smart to skip out at the first sign of danger, especially with start-ups. Most start-ups don’t live long enough to celebrate an anniversary, and in general, only one in 10 investments pays off. It’s not hard to understand their position.
By having all relevant documentation on hand for their perusal, you show investors you’ve got nothing to hide. This can help foster trust. Give them no reason to doubt. Many investors will already be skeptical; don’t help them with that.
4. Double Your Needed Cash Estimates
One of the most difficult things in your life as an entrepreneur may easily be approaching investors and asking for funding. The only related act that’s more difficult would probably be asking them for more money. In many cases, asking for more funding is an admission of failure. It’s not easy for you, and it’s not easy for investors.
While there are reasons to ask for more funding — expansion, for example — most entrepreneurs end up doing so because they underestimated the amount they’d need. It’s tempting to give a low number just to get an investor to agree, but that could easily backfire. One small misstep can leave you with too little capital to go on, and an investor wondering whether they should cut their losses and jump ship.
5. Support Revenue Estimates
Investors aren’t looking to give your start-up money because they think you need help. They’re investing because they believe they’ll profit from the action. To convince them that profit is possible, you’ll have to give them your revenue estimates and have something to back them up.
Any projections you give them must be realistic. They can be optimistic as well, but no investor will take you at your word. Give them all the numbers and facts they need to believe in what you’re saying.
Dealing with investors can be a scary experience as an entrepreneur. The fate of your start-up can easily lie in their hands. If you can’t convince them, your start-up can become stillborn and you’d be left with nothing but a bad taste in your mouth. Give yourself room to breathe; be confident at meetings. Support everything you tell them with facts and figures, and don’t lie. Don’t change the numbers in an effort to push them into investing. Stick to the facts and you’ll do well.
Not sure where to start? Venture North Group will provide Alaska entrepreneurs a clear understanding of what next steps to take and how to raise Venture Capital in Alaska and beyond.