You could feel tempted to prioritize style over substance if you’re a financial professional looking to attract outside investment to grow your business. After all, your business is far from the only one searching for more funding. The world might forgive you for thinking that you should focus on being the loudest or the most interesting. We need to consider the number of other voices competing for investors’ attention. Even if the process may entail a fair amount of flair, a basic presentation built on reliable facts and a strong value offer can get you much further than flash alone. Moreover, it’s critical to remember that investors want to make a safe investment. Therefore, the more effectively you can communicate your strengths, the more successful you’ll be.
So, if you want to secure funding, this article is for you. We’ll tell you how to create your perfect pitch and the steps after that. So, let’s just begin.
How can you secure your first round of funding?
Being willing to market yourself and your company is essential if you want to secure finance for your company.
So, attend investor events and engage in as much conversation as you can. These events are a fantastic way to spread the news about your company. Moreover, it’s an amazing place to practice your elevator pitch. By attending these events, you can also set up contacts while getting exposure.
However, be sure to speak with other business executives who have just completed a capital round besides investors. Talk to locals to learn about the process and to gain introductions to their investors. Approach locals who are where you want your business to be.
Planning for your funding round
The secret to attracting investment is preparation and practice. Before any investment round, you should make sure you’ve taken the following steps:
1️⃣ Know your investors
Thoroughly study the specific requirements that investors have for a financing proposal. Usually, the majority will demand to see proof of your burn rate, financial runway, and cash projections. Therefore, it’s crucial for business owners to understand the sector properly.
2️⃣ Create your best pitch
You should start by deciding on your targets as you sit down to consider how your business will approach your investment round. Finding a strong lead supporter early on is essential. This is because having the proper person in the lead is more likely to instill confidence in the other backers.
Once your target list is complete, it’s time to give your pitch some serious thought. What makes your idea unique and how your business is set up to maximize it are two of the most crucial components to include. Also, avoid getting sucked into emotional pleas that are too idealistic. Instead, focus on evidence that is simple and to the point. Show your knowledge of your potential clients. It should include how your solution addresses their demands, and how you intend to compete with other businesses in the market. Besides, never forget that investors are primarily focused on their own profitability and may not be as interested in seeing you succeed as they are.
This indicates the need to focus on financial forecasting with data. It should be the data that shows your understanding of the market and what it will take to succeed. You must also give a precise schedule showing when your business will be able to earn a profit. However, it still may not be as eye-catching as some of the business reality TV pitches. Therefore, you will have a higher chance of getting the funding you need to keep your firm competitive.
3️⃣ Perfect your pitch deck
Investors see hundreds of pitch decks every year. Therefore, you must ensure that yours stands out in the best possible ways. Start with a thorough but not overly thorough slide deck and an executive summary that explains what you want and why.
You want to achieve that delicate balance between providing too little and too much information. So, keep in mind that you could only have a short time to present. Also, you don’t want to have to miss any material. Therefore, include readable graphs, charts, and screenshots in your presentation.
4️⃣ Make a cash flow projection
For investors, a cash flow prediction is essential. First, it shows that you are in control of your firm. Additionally, it projects that you are actively planning for the future. This increases the likelihood that a possible investor will have faith in your company.
Second, investors often seek growth that is rather aggressive. After all, customers expect a prompt and sizable return on their investment. They can see exactly where your money is going and how much you’re investing in growth if you have a cash flow forecast on hand.
5️⃣ Include a table of capitalization
A capitalization table, also known as a ‘cap table’, reveals who currently holds what percentage of your business. If they’re wanting to invest a sizable sum of money in exchange for a larger portion of your company, they could be wary of cap tables with too many investors. They will also pay close attention to identifying any prominent or important investors. This could favorably influence their choice.
6️⃣ Filings at Companies House
To give investors a complete and accurate view of your finances and shareholding history, make sure you keep all your fillings updated.
These are some of the tips you must follow to successfully secure your first round of funding. Make sure your pitch is unique and to the point as it’s the most important part if you are trying to get investors to invest in your venture.