It is widely known how difficult it can be for a start-up/scale-up business to attract investment to their business so that they can begin to take their venture to market and start to build an innovative business which will revolutionise their market. This blog aims to help your tech start-up to stand out from the crowd to make sure its your business who attracts the attention of potential investors.
Here are our 10 Top Tips for attracting investors:
1. Acknowledge that all investors are different. In the same way that all clients and start-ups are different, all investors are different. Some investors might be seeking out a hands-on investment opportunity because they’ve hung up their boots on their professional life themselves and want to get their teeth into a new project. Others might want a completely hands-off role. Some might be looking for short-term income potential, whereas others might be seeking out capital growth over the long term. Either way, it’s essential when you’re pitching to an investor that you understand their needs and address those needs in your presentation.
2. Demonstrate that you understand the problem. When you’re pitching to a potential investor, it’s essential to demonstrate clearly that you understand their needs as well as your future client’s problems. By demonstrating both of these things, you show clearly that your purpose as an innovator or entrepreneur is to successfully and profitably plug gaps that exist, both in your investor’s portfolio and in the solutions being sought out by your potential clients.
3. Clearly show that your solution addresses the problem. Once you’ve identified that you really “get” the problems, it’s time to show simply and effectively that you have the right solution. Describing your solutions in benefit terms will make them more appealing and more convincing to both investors and clients alike. In order to do this, think about how you can describe what’s to be gained either investing in, or buying your solution.
4. Acknowledge your competitors. When you’re trying to attract the attention of a potential investor, there’s nothing to be gained in implying that your solution is the only solution available to your target market. Even if no other similar solution exists, potential clients can always choose to do nothing. By acknowledging your competitors, you not only demonstrate that you’ve got a strong handle on reality, but doing this will also enable you to show relatively impartially how your solution stands out from the crowd.
5. Indicate scalability. Investors are on the lookout for BIG ideas and are much more likely to be drawn to your proposition if they think it has the opportunity to grow. Showing how your concept can either convert a large chunk of the market or can develop to create significant cross or upselling opportunities is much more likely to get the attention of an investor than an idea that’s limited in potential.
6. Be realistic. While you need to be positive and optimistic about your business model, you still need to be realistic. There is little to be gained in promising a potential investor the earth and delivering well below expectations. You need to balance positivity and optimism with reality. At the end of the day, it’s better to over-deliver than under-deliver.
7. Be honest. Honesty and trust are two of the key characteristics that most investors look for when deciding where to place their hard-earned cash. If you can demonstrate these in all of your dealings, you’re more likely to win the hearts and minds of potential investors.
8. Be yourself. While you need to be professional in all your dealings with your team, your potential clients and potential investors, it’s important to let your personality shine through. This is a tall order for some young innovators, but it’s something that you’ll learn with time. Allowing your own nuances subtly come through in your communications and dealings will make you more memorable and more liked than someone who isn’t being true to themselves.
9. Communicate clearly. It sounds obvious, but in all your communications, it’s essential that your points are crystal clear. It is worth writing, reading, re-reading, editing and re-editing all of your communications to make sure that the message you want to get over is coming through clearly. If you’re in any doubt about your ability to do this yourself, it’s worth considering bringing in a pro to help.
10. Make them want you. While there’s nothing to be gained in implying that you have investors queuing at the door to invest if you haven’t, if you do have a good amount of interest, a clever tactic is often to make investors think that they might miss the boat. That way, they’re likely to buy in even quicker!
Vivolution is a management consultancy in Glasgow with focus being placed on supporting companies who have aspirations of revolutionising the healthtech, fintech and digital industry. Read more about what type of businesses we work with on our sectors page.