Part III of Finding Funding for Your Venture

Targeting and Meeting Investors

Your business plan is ready. You have identified how much funding you will need and what it will be used for. Where do you find investors, how do you meet them? The next step is properly identifying who in your network to approach.

As previously mentioned in (Part I of Finding Funding for Your Venture), the stage of development of your venture will probably play a significant role in your ability to lure investors. Investors all have their areas of expertise and investment guidelines. The following chart is just an example, there are always exceptions.

Stage of Venture                   Amount                      Sources  

R & D                                       < 1 million                   Founder, FFF, Angels

Seed (Start-Up)                       25k -5 million              FFF, Angels, Grants, Reg. A

Product developed                  1-50+ million              Angels, VC, PE, Joint venture**

High Growth                            >100 million                IPO, PE, Acquisition

** Joint Venture: defined here as another company willing to invest in return for a strategic alliance, % of profit, opportunity to acquire you, or equity. Commonly used by Big Pharma to maintain their drug pipeline, but also used for vertical integration relationships.

 Whether you are targeting informal investors (Angels, FFF etc.) or formal investors (VC, PE, Institutions) you should expect them to do due diligence on you, including background checks and  references. Perform your due diligence also. One of the most important criteria for selecting investors is to consider what resources they bring to the table (Management, industry, and financial expertise). 

Targeting Do’s:

  • Do your homework. Determine which types of investors best match with your vision, your stage of development, and your willingness to give up ownership and power.
  • NETWORK, NETWORK, NETWORK. Investors will not beat down your door.
  • Do try to obtain funding through channels partners, vendors, suppliers and customers.
  • Qualify your potential investors. Don’t waste your time with people who do not have the capital you need.
  • Understand that your business usually must have the potential to be national or international in scope to attract VC/PE groups.

Targeting Don’ts:

  • Don’t use people or companies that claim to guarantee you “x” number of contacts/meetings etc. or guarantee funding.
  • Don’t send out emails looking for funding. It is almost always considered spam and makes you appear to look cheap and unprofessional. Initial emails should be introductory in nature, not a request for money. This applies to internet networking also.

Links to investor groups are available to clients of The Entrepreneur’s Advisor™.

Investor Meeting Tips

  • Never meet with more than one investor at a time. Doing so allows for negative viewpoints to be shared by parties and makes it more difficult to answer questions and concerns.
  • Show great respect and accept all feedback from your potential investors. They see many plans and are constantly pitched by professionals. Their feedback is critical for you.
  • Meet with several potential investment partners. Make sure the chemistry and working relationships can be established
  • BE HONEST. No one will forgive a lie.
  • Be respectful at all times. Your first meeting is used to determine if there is mutual interest, not to pick up a check. Although you may be desperate for funding, do not appear or present yourself and your venture in this manner.
  • Have your “Road Show” prepared. Investors are not going to read thru your business plan why you wait. Prepare a PowerPoint or some other visual presentation that recaps the opportunity and your company.
  • Have a prototype or demonstration of your product or service.
  • As stated in many blog pieces – “CHECK YOUR EGO AT THE DOOR”.

Contact us today at The Entrepreneur’s Advisor™ for a free consultation on how we can help you prepare for finding funding or assist investor groups with their analysis. The Entrepreneur’s Advisor™ is the elite and low cost solution to providing third party review for:

·         Business plan review.

·         Business plan construction.

·         Analysis for investor(s).

·         Due diligence for VC, PE and Angel investors.

https://blog.theentrepreneursadvisor.com

PART IV – Making the Deal

1 thought on “Part III of Finding Funding for Your Venture”

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top