Are you asking yourself how to prepare for investor meetings? Do you want to make the best impression during an investor meeting so that you can land a check to continue scaling up your business?
It’s easy to have a great business idea and still fail to secure investment. Much of that is down to preparation. If you prepare well for an investor meeting, you need to maximize your chances of getting the investment you need.
In this article, I’m going to share some of the advice I give to entrepreneurs on Inner Circle, which is the ultimate fundraising training where we help founders from A to Z with everything related to fundraising.
There are essentially five things you should do to prepare for an investor meeting, so let’s look at these now in more detail and get you ready for that critical moment.
1) Do the Ground Work
The first thing to do when thinking about how to prepare for investor meetings is to take care of the groundwork. There are two things you should categorize as the groundwork for your investor meeting. These are:
- Your Pitch Deck
- Your Investor Research
I’ve written extensively about creating the best pitch to secure investment. It is a way to both grab an investor’s attention and to educate them about what your business is so that there is no misunderstanding during the meeting.
Your pitch deck works well as a concise, 15 to 20 slide presentation. This describes the why, the what, and the how of your business. In essence, you share how this solves a problem for consumers and only one or two stats about the potential market size for your product/service.
For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
If you go into an investor meeting having poorly described what it is you do or are hoping to accomplish, then the investor will grow frustrated with you because they may have granted the meeting based on what they thought your product was, rather than what it is. Here it is key to show the investor that you know the customers that you are serving inside and out. The more data you have to back this up the better.
With regard to your investor research, you should have a good understanding of the investor, their history, and how they can help your business. This includes:
- Previous companies the investor has worked with
- Any businesses the investor founded
- The niche or industry in which the investor has experience
- Hobbies, skillsets, etc so that you can build a personal connection and have that background relatedness
This will show the investor that you understand how they can help you and that you have done your homework ahead of time.
You can also supplement this information with anything you find out about their interests and passions. I’m not saying you should go “full stalker”, but a simple search of the investor’s social media accounts should allow you to see the types of things they are interested in. You can see on Twitter the things they are following and like. Or also you can see on Linkedin schools they attended or perhaps the groups they are part of which will give you a better understanding of where there are similarities between you and them.
This can be used to connect with the investor during the meeting, especially if you have shared interests or hobbies.
2) Have Your Pitch Deck Ready
The biggest mistake you can make when wondering how to prepare for investor meetings is not having your documents ready to go. By in large, this means you have your full 10 to 20 slide pitch deck ready, along with a separate condensed business plan, team resumes, and more in-depth financials to support your deck.
No matter how good a business idea is, investors will not invest in you as an entrepreneur if they feel you haven’t put in the work to prepare properly. In terms of success remember that ideas are 5% while execution accounts for 95% of it.
By entering into an investor meeting with all your documents ready to be reviewed, you imply that you are a serious business person who is willing to put in the hard work of preparation. This create a great impression of you and your business.
Also, make sure that your pitch deck emphasizes where the investor’s money is going to be spent and why it is needed. This is the use of proceeds. You need a clear and detailed breakdown.
3) Prepare to be Challenged
An investor meeting can be anything including a phone call, a conversation over coffee, or even a full pitch deck presentation at a partners meeting. Too many founders feel that when they’re meeting with an investor in a more informal way, this means they won’t be challenged significantly.
Nothing could be further from the truth when thinking about how to prepare for investor meetings. No matter the setting, the investor is always going to challenge you. They will want to pressure test your ideas, your ability to think on your feet, and the depth of your business plan. Keep in mind that investors are always looking for reasons to not invest in you.
In doing this, they are going to ask you tough questions. You need to be prepared for those questions. This means not getting flustered. It also means having concise and truthful answers to important business questions at hand.
Remember, investors are smart. This is especially true of venture capitalists who have negotiated the business world effectively. You need to be truthful, even when the truth may paint a less rosy picture of your business. Learn also how venture capital works. In the video below I cover this in detail.
You’ll also need to look at your business plan and your pitch deck. Put yourself in the shoes of investors. What are the weaknesses of your business plan? What are its biggest challenges? How will you overcome them?
Investors will try to find these weak spots, so prepare to have the answers ready at hand to put their minds at ease.
4) Know Your Limits
There are two parts to knowing your limits. They are:
- Knowing your investment limit
- Knowing the limit of your own expertise
With regard to the first point, you need to have a solid idea of how much of your business you’re willing to trade for investment. This means having precise ideas about the share structure of your business, and how this might be divided up given new investment.
Important to note here is that the last thing you want to do is to present a valuation first. Let the investor talk first and have them suggest a valuation. Then you negotiate it them up on the valuation. If you present the valuation first then you are essentially negotiating against yourself which is a big NO NO.
Investors also want to make sure that the founder does not become too diluted in your stake. It’s a counter-intuitive concept, but the reason for this is that they don’t want your stake in the business to become so diluted with each investment round that you lose interest in the project.
To know your investment limit then is to have a clear idea of the share structure and the amount of equity you’re willing to give away at a specific price.
The second part of knowing your limits is to recognize any gaps in your own expertise. This comes back in some ways, to be honest about you and your team. If the investor has more knowledge than you about something, then show your appreciation for this.
This doesn’t mean you shouldn’t challenge ideas, but you should be open to criticism. Investors, especially if they are investing large amounts of capital, want to know that an entrepreneur will take criticism and advice.
They will not want to invest in a person who is not willing to listen.
5) Make a Good First Impression
Lastly when thinking about how to prepare for investor meetings – and this applies to any interview situation – make a good first impression! Schedule the meeting so that you’re early for it and dress appropriately. Depending on the investor, this means either being in a suit or dressing smart casual.
Be enthusiastic, confident, and agreeable. All these things matter. Investors are not just investing in your business, they are investing in you. Show your best side.