Without money, startups are nothing more than a great idea and passionate founders. With enough money, though, that idea and passion can turn into a successful – often exceedingly successful – business venture. In fact, one of the most important parts of starting a new business is ensuring you have enough capital to cover startup costs until your company becomes profitable. And to get that capital, more often than not, startups need angel investors. That said, follow these five do's and don'ts when meeting with your potential investors:
1. Do come prepared
Getting someone to invest in your company takes a lot more than just a business meeting. It should include both a clear and effective presentation and time spent answering any questions an investor may have. So, before your meetings, make sure your business plan is fully developed and includes hard data and research that lenders will want to know before investing cash. Then, turn your business plan into a presentation of key points. Make sure you come with hard copies of the presentation, any information you may need to answer questions fully and, of course, business cards you can give to the people you're presenting to.
2. Don't talk money right away
A first meeting (and even a second) is not the time to ask for a specific amount of money. First, you want to lay out detailed reasons people would want to invest money in your venture. It's unlikely you're the only startup founder an angel investor is meeting with, so focus on presenting yourself and your company in the best and most honest way you can. Money specifics should be saved until follow-ups and future meetings.
3. Do know your business
It's important that you know your business inside and out, including any pitfalls you may come across during the startup process. The more confident you are when answering questions, the more comfortable an investor will feel putting their money into your company. If you can't answer a question, promise to get an answer to them in a follow-up email.
4. Don't focus on promises
Unless you're a fortune teller, there's no way you can accurately predict the success of your company. Instead of making promises you may not be able to keep, focus on the steps you're planning on taking to get your business off the ground and the research you have that tells you those steps are going to be successful. This means having prepared business models, onboarding strategies and revenue plans that you can defend with facts and data.
5. Do follow up
At the end of the meeting, make sure you talk about the next steps for both parties and the best way you can follow up. Call or email potential lenders within the week to ask for a second meeting or answer any further questions they may have. And remember: If you do land a great investor, he or she should be regularly updated. Keep up a clear and transparent relationship with your investors so they know how you're using their money.