Approaching investors requires specific techniques. Get advice before you approach them. You may not get a second chance. (From Eng. Khalid Suleimani’s Book 84+1 tips) July 2019
Many entrepreneurs know they want an investment, and exert big efforts in trying to find one. But once they land a meeting, their tongues get tied and they don’t know what to say. As we have repeatedly mentioned in Related Tips, considering a meeting with an investor requires learning a new language other than your native “techie” tongue. You either have to learn to speak it or get a translator to do it. Investors speak “venture financial”, and if you have not learned the basics, please don’t go.
The good news is that learning “venture financial” is not rocket science, and you can easily master it. If not, you can get professional assistance to help you put forward a great presentation and produce a financial document. You have to be able to answer basic questions about your business financials as confidently as you can talk about your system features and your apps’ technical superiority. The investor is mainly interested in how much money you want for how much equity, for how much of a return, and how soon. All their questions lead to these basic questions, one way or the other. In early stages, you may be able to get away with no business plan. But as your business gets bigger, professional documents become a necessity you can’t avoid.
Most young entrepreneurs learn the grim reality that they don’t speak “venture financial” when they first pitch in front of an investor. I recall the first time I tried to do so in 2001. I was ready to talk about our business and how it had grown by 500% in 5 years, but I had no valuation, no IRR figures, no five-year projections, and my presentation was lengthy and boring. After I got that first “No thank you”, I hired a financial consultant to help me prepare for the next one and draft my very first private placement manuscript (PPM). It cost some money, but it was well worth it. It was not only a service I outsourced, but also a training course in investor-speak. As mentioned in Related Tips, most Venture Capital firms complain about entrepreneurs not having the right tools to assess their own business.