The road to Seed Stage investment doesn't have to be complicated. In our latest blog series, Brooke Richardson, our Investments Director in EMEA for First Ticket offers a comprehensive step by step guide for founders to best navigate the journey. In this third article, she shares some the do's and don'ts when trying to win over an investor.
You've found your investor and you're ready to win them over. Remember that first impressions leave a lasting impression, and your first meeting with investors goes a long way toward sealing the deal. I've been with TheVentureCity for more than two years, and along the way, I've met with hundreds of founders who are just starting out on their fundraising journey. From those experiences, I want to share some dos and don'ts around how best to woo investors.
Investors' do's ✅
Tell investors a story: explain what your professional journey has been and how it ties into your personal life (only if there is such a connection, don't force it otherwise). Detail why and how you came to build the project, and what you want to achieve through it.
Be pitch perfect: ensure that your pitch deck is polished and supports the narrative you're presenting. See our previous article in this series for more information about creating a sterling pitch deck.
Prepare to show a product demo: this applies particularly for product-led investors, but is a generally good practice to follow. Some investors may ask for the demonstration in the second interview, but it's worthwhile preparing one for the first too.
Know your metrics: data is king in the investment sphere. Have your numbers ready for metrics like users, retention, and revenue. Tip: at TheVentureCity, we use the Quick Ratio to analyze a startups' growth.
Open up a dialogue: include visuals and interactive content throughout your meeting that investors can engage with. You don't want to speak at investors, you want to invite them to participate in your vision. By creating a conversation with these materials, investors can better identify and discuss how to work together and the value they could add to your company.
Know your investors: research the people you'll be speaking to beforehand. Understand their background and experience and integrate this into the meeting. Say "I know that you have worked with X startups before and we're a natural fit because Y." Also remember to ask questions. Due diligence has to be carried out on both sides, and you should be selective about the investors you choose to work with.
Think long term: prior to meeting investors, really consider if venture funding is the correct route for you. Be prepared to discuss your vision for 3, 5, 10 years out. VC comes with the responsibility of raising funds in the future to meet expectations of scaling. If you're not in a position to play the long game, other sources of capital may make more sense.
Investors' don'ts ❌
Over answer one question: be efficient with your time and keep responses concise. Investor meetings typically last only 30 to 45 minutes, so time is of the essence.
Brag about yourself: investors talk to thousands of entrepreneurs and can spot exaggerated or egotistical founders a mile away. There's no problem with highlighting your accomplishments and strengths, but remain humble and natural.
Focus too much on future product plans: investors will have read through your pitch and don't need an in-depth description of what's to come. Instead, use your data to focus on where you are at the moment, what problems you have, and how you're overcoming them.
Overshadow your team: if other people from your company are in the meeting, don't speak for them. Invite them to contribute in their own words and showcase how the team functions. Investors will pay close attention to team dynamics.
Mislead investors about the round: if you've met with other VCs, that's not the same as them being close to closing. Investors also talk and will quickly confirm if this is the case.
Use vanity metrics: figures like the number of social media followers or the number of views on a promotional video are not indicators of your business performance. Don't present these to investors.
Be combative or defensive: An investor's opinion is just that - an opinion.If you're not a fit for a certain accelerator or fund that's not necessarily a commentary on your business, it's just that you're not the right match for that particular place. Every investor has their own thesis and preference, you're best to focus on where you're most compatible.
Tips for after the meeting 📝
- If you received a "not yet" be sure to stay in touch with investors, giving them updates and asking for a follow-up meeting when you have the right traction.
- Share new metrics and information without being prompted. It's your responsibility to keep investors on top of what's happening in your startup.
- Reach out to fellow founders via LinkedIn and ask about their experience with investors. Gather feedback about how the investor works, what their communication style is, and make an informed decision about working with them.
At TheVentureCity, many investors (myself included) have been founders and we know how difficult, time consuming, and frustrating it can be to raise funds. But we also know that resilience is key. Stay determined, and remember these do's and don'ts.
Hopefully we'll see in one of our First Ticket interviews soon!