Time after time, we heard from both investors and entrepreneurs that being able to tell the right story is key to raising money successfully. But what does that actually mean? We have used the insights from investors and entrepreneurs to break this down.
Here, investors will want to understand who you are as the founder, and the motivation driving you and, therefore, your company. Be ready to answer questions about your leadership skills. Many investors will put money in you as the entrepreneur, more so than your company, so make sure you are clear in why you have started your company and what you hope to achieve.
You should be able to know your market: who are you selling to, and what problem is it solving? If you have a track record of sales, great; if not, be ready to answer questions about why someone will pay you to solve a perceived problem. Set lofty, but achievable goals, and use concrete examples.
The details here will differ based on how advanced your company is. If you have not sold a product yet, then you need to make clear, provable assumptions about how many you will aim to sell in the coming months, how much each unit will cost to produce, and how many units you need to sell before you reach the break-even point. While you should be able to tell a growth story, most investors will want to understand your process of thinking and how you come up with your projections, rather than what the numbers are, specifically — for early-stage start-ups, these are educated guesses.
Do not just ask for a random number; do your research and explain how the funding will get you to the next key milestone. This should not be an investment in people or machinery, but the outcome of that investment.
Use this opportunity to showcase how your company is aligned with the investor you are pitching to. Research on the funders will help a lot here. If he or she prioritises impact, talk about the potential social or economic benefits of your company; if one of the partners has experience in the field, explain what connections you would like them to facilitate. Investors want to be seen as smart money, so talking to them about why you think they would be good partners could be a good way to get them to warm up.