How to avoid losing an investor in less than 5 minutes


If you’re at the beginning of the road in the business world and you’ve just launched your first startup, you may find it difficult to persuade someone to invest money in your venture in exchange for shares in your company. Although this may be one of the most important steps to truly leave a mark in the business environment, many entrepreneurs fail miserably in the first five minutes of meeting a venture capitalist for the first time. So here are the methods you could use to prevent this from happening to you.

1. Practice your elevator pitch so that you won’t fumble. Typically, the first question a venture capitalist asks a young entrepreneur is why he/she thinks this venture will bring him a great deal of money. Make sure and answer concisely with compelling arguments in less than 90 seconds. If you can’t do that, you shouldn’t even be taking the meeting in the first place. Prepare yourself by considering answers to the following questions: What human pain does your startup plan on relieving? Why would people pay for you to do that? How do you know for a fact that your solution is viable and will work?

Related:  5 Awesome Ways to Lose the Interest of an Investor While Pitching

2. We all know that the business world is extremely competitive, making it a high-risk environment in which most people lose while only a handful hit the jackpot. Be confident and proud about your past accomplishments. Convince the VC to invest in your startup by showing him or her that you can thrive and achieve success. You can use your achievements in academics, sports or any other relevant field to illustrate that you can achieve whatever goal you may set.

3. Hire competent people rather than mediocre ones. By having a mediocre startup team, the venture capitalist will lose faith in your business in a blink of an eye. No serious entrepreneur wants to have to deal with people that are not sure of what they are doing. That person may even think you’re just wasting his or her valuable time and that you’re not worth the effort. If you don’t feel confident that you are able to hire competent people, let someone else do this before you meet the investor.

4. Have a good knowledge of your financial needs. Only a few people get to the next step and can say they’ve been asked how much capital they need. Give them the wrong number and you’ll automatically lose their interest and attention. Try offering a rough number that will prove right for the investor. Have in mind that the right answer will always differ for each startup. Consider your startup needs $1 million dollars; prove to the venture capitalist that the market is big enough and suitable for your startup to generate a return in a big initial investment.

5. Make sure you don’t skip the customer research. When you sit down with an investor you already need to know who your customers and influencers are, otherwise you’l leave the venture capitalist empty-handed. Knowing who your customers are going to be is just the first step, you should have conversations with at least 100 of them. Don’t take the meeting if you don’t know the answers to questions like: Why will your company be solving matter for the customer? Who are your competitors? On what criteria will the customers choose you rather than your competitors? Why will your product prove to be the very best? How much time will it take to close a sale? How will you win your customers over?

Avoid all these fatal flaws and your business pitch will inspire confidence and trustworthiness. If you don’t feel all that confident, just cancel the meeting.

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