What to prepare before meeting the startup investor?
Karolina Walczewska, 23 September 2020
One fundamental and a key element for startup success is the ability to obtain finance to develop its own company. However many people still have some problems with finding good funding sources. Fortunately, nowadays there are plenty of good and proven ways to collect money for a startup. Bear in mind that such a process is not an easy task, and it takes time. This article discusses how to prepare for the search for an investor.
How to prepare for the search?
When independent startup financing is not possible, searching for other solutions may be difficult. That's why it is worth preparing for such a thing. Firstly, obtaining some finance takes a lot of time, effort, patience, and work put into our idea. Be aware of the complexity of such a process. Investors are intelligent people. They always take care of their interests. The complex process of getting financial help is subject to many conditions. Unfortunately, money doesn’t grow on trees waiting for a random person with an idea to come and grab it. The process of obtaining it is a real challenge requiring proper business preparation.
Start with business plan
First and foremost, it is important to create and document the fundamentals of the startup. When raising funds, regardless of the kind, it is necessary to prepare a business plan - a document that very precisely describes the given enterprise and contains information about the general characteristics of the company, a SWOT analysis (strengths and weaknesses, opportunities and threats), goals, marketing, and financial plan. The business plan describes the product to be released to the market along with the entire technological outline of the implementation. The next step is to thoroughly prepare the financial model. Starting from the exact valuation of the project, through sales, revenue, and cost forecasts, and ending with such issues as finding and hiring specialists.
Create the Pilot User Group
It is equally important to establish a group of users who will ‘kick the tires’ of the first versions of the product and to collect valuable feedback. Then, thanks to such information, further improvements, and the enhancements of the product will be exhaustively facilitated.
If your budget affords it , try to create an MVP
Consider creating and developing an MVP (minimum viable product) version of your product - a product that meets minimal criteria for market readiness and launch. This will help to collect valuable information about the operability and suitability of the product and verify that it meets with the expectations and approval of its users. More about the MVP approach can be found in our article What is an MVP? When is it worth implementing? Creating a prototype with only basic functionalities is often associated with affordability when compared to full-scale deployment. Having prepared an MVP product makes it easier to attract potential investors and to show that the product is a viable, meaningful solution with demonstrable business potential.
Prepare a sales presentation, practice and present
Potential investors are especially interested in a sales presentation that provides all the relevant information about the product. Presentation skills are an important factor. Repeated mock presentations and prepared answers for anticipated questions best prepare the presenter for the investors.
Good and reliable preparation is key to success. Thanks to such an approach, your prospective investor will treat you like a potential partner for future cooperation, but more professionally, as a result. Leaving everything to the last minute with zero or minimal preparation ensures that entrepreneurs will not take you seriously. Why lose a chance to deploy your product, and maybe also future ones? That's why it is crucial to meticulously prepare for the subject.
The above-described points pertain to soliciting external investors. For other forms of funding, subsidies, loans, and/or credits should be investigated. Funding is, itself, an arduous undertaking, especially due to long waiting times for a response, but finding the funds to allocate to the project is sufficient motivation.